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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________.
Commission file number 1-13300
CAPITAL ONE FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 54-1719854
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2980 Fairview Park Drive, Suite 1300, Falls Church, Virginia 22042-4525
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(Address of principal executive offices) (Zip Code)
(703) 205-1000
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(Registrant's telephone number, including area code)
(Not Applicable)
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
---- ----
As of July 31, 1996, there were 66,260,240 shares of the registrant's Common
Stock, par value $.01 per share, outstanding.
1
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CAPITAL ONE FINANCIAL CORPORATION
FORM 10-Q
INDEX
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June 30, 1996
<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (unaudited):
Condensed Consolidated Balance Sheets............... 3
Condensed Consolidated Statements of Income......... 4
Condensed Consolidated Statements of Changes
in Stockholders' Equity ......................... 5
Condensed Consolidated Statements of
Cash Flows ...................................... 6
Notes to Condensed Consolidated Financial
Statements ...................................... 7
ITEM 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations ......................................... 10
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K ....................... 26
Signatures ............................................. 27
</TABLE>
2
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ITEM 1.
CAPITAL ONE FINANCIAL CORPORATION
Condensed Consolidated Balance Sheets
(dollars in thousands, except per share data) (unaudited)
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1996 1995
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<S> <C> <C>
ASSETS
Cash and due from banks $ 8,426 $ 51,680
Federal funds sold 600,000 465,000
Interest-bearing deposits at other banks 233,700 355,780
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Cash and cash equivalents 842,126 872,460
Securities available for sale 642,542 413,016
Credit card loans held for securitization 1,000,000 400,000
Credit card loans 2,569,740 2,521,679
Less: Allowance for loan losses (74,000) (72,000)
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Net loans 2,495,740 2,449,679
Premises and equipment, net 155,569 139,074
Interest receivable 57,252 55,573
Accounts receivable from securitizations 409,983 359,379
Other assets 72,909 70,140
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Total assets $ 5,676,121 $ 4,759,321
==========================================================================================================
LIABILITIES
Interest-bearing deposits $ 1,215,499 $ 696,037
Federal funds purchased 194,500 709,803
Bank facility 65,000 100,000
Bank notes 3,134,217 2,491,869
Deposit notes 200,000
Interest payable 70,724 73,931
Other liabilities 131,918 88,490
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Total liabilities 5,011,858 4,160,130
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01 per share; authorized
50,000,000 shares, none issued or outstanding
Common stock, par value $.01 per share; authorized
300,000,000 shares, 66,249,466 and 66,174,567
issued and outstanding at June 30, 1996 and
December 31, 1995, respectively 662 662
Paid-in capital, net 473,502 469,830
Retained earnings 190,099 128,699
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Total stockholders' equity 664,263 599,191
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Total liabilities and stockholders' equity $ 5,676,121 $ 4,759,321
==========================================================================================================
</TABLE>
See notes to condensed consolidated financial statements.
3
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CAPITAL ONE FINANCIAL CORPORATION
Condensed Consolidated Statements of Income
(dollars in thousands, except per share data) (unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
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1996 1995 1996 1995
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<S> <C> <C> <C> <C>
INTEREST INCOME:
Credit card loans, including fees $ 123,403 $ 90,741 $ 237,514 $ 167,755
Federal funds sold 4,487 5,255 12,464 13,265
Other 9,863 8,436 20,917 12,479
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Total interest income 137,753 104,432 270,895 193,499
INTEREST EXPENSE:
Deposits 11,031 12,210 23,574 21,933
Federal funds purchased 4,104 11,023 10,392 19,722
Bank facility 1,463 2,920 3,523 17,585
Bank and deposit notes 46,702 33,057 88,145 50,963
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Total interest expense 63,300 59,210 125,634 110,203
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Net interest income 74,453 45,222 145,261 83,296
Provision for loan losses 25,110 17,260 50,278 25,896
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Net interest income after provision for loan
losses 49,343 27,962 94,983 57,400
NON-INTEREST INCOME:
Servicing 109,115 99,791 237,301 201,295
Service charges 42,034 20,149 68,658 37,261
Interchange 14,119 8,424 22,417 14,203
Other 5,331 6,425 13,371 12,190
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Total non-interest income 170,599 134,789 341,747 264,949
NON-INTEREST EXPENSE:
Salaries and associate benefits 49,655 31,309 93,931 61,442
Solicitation 42,733 34,124 94,257 75,207
Communications and data processing 19,879 14,975 34,819 31,475
Supplies and equipment 14,399 9,369 26,783 18,325
Occupancy 4,924 3,201 9,019 6,566
Other 27,744 23,454 56,975 43,773
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Total non-interest expense 159,334 116,432 315,784 236,788
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Income before income taxes 60,608 46,319 120,946 85,561
Income taxes 22,425 16,673 44,750 30,806
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Net income $ 38,183 $ 29,646 $ 76,196 $ 54,755
============================================================================================================
Earnings per share $ .57 $ .45 $ 1.14 $ .83
============================================================================================================
Weighted average common and
common equivalent shares outstanding 66,892,902 66,465,786 66,858,455 66,319,049
============================================================================================================
Dividends paid per share $ .08 $ .08 $ .16 $ .08
============================================================================================================
</TABLE>
See notes to condensed consolidated financial statements.
4
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CAPITAL ONE FINANCIAL CORPORATION
Condensed Consolidated Statements of Changes in Stockholders' Equity
(dollars in thousands, except per share data) (unaudited)
<TABLE>
<CAPTION>
TOTAL
COMMON STOCK PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL, NET EARNINGS EQUITY
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<S> <C> <C> <C> <C> <C>
Balance, December 31, 1994 66,067,250 $ 661 $ 462,844 $ 11,052 $ 474,557
Net income 54,755 54,755
Cash dividends - $.08 per share (5,293) (5,293)
Issuance of common stock 24,020 434 434
Exercise of stock options 6,582 132 132
Restricted stock grants 35,715
Amortization of deferred
compensation 1,974 1,974
Change in unrealized gains on
securities available for sale,
net of income taxes of $2,827 5,249 5,249
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BALANCE, JUNE 30, 1995 66,133,567 $ 661 $ 465,384 $ 65,763 $ 531,808
===================================================================================================================
Balance, December 31, 1995 66,174,567 $ 662 $ 469,830 $ 128,699 $ 599,191
Net income 76,196 76,196
Cash dividends - $.16 per share (10,248) (10,248)
Issuance of common stock 67,379 1,376 1,376
Exercise of stock options 8,184 132 132
Tax benefit from stock awards 230 230
Restricted stock, net (664) 134 134
Common stock issuable
under incentive plan 1,800 1,800
Change in unrealized gains on
securities available for sale,
net of income taxes of $2,448 (4,548) (4,548)
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BALANCE, JUNE 30, 1996 66,249,466 $ 662 $ 473,502 $ 190,099 $ 664,263
===================================================================================================================
</TABLE>
See notes to condensed consolidated financial statements.
5
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CAPITAL ONE FINANCIAL CORPORATION
Condensed Consolidated Statements of Cash Flows
(dollars in thousands) (unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
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1996 1995
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<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 76,196 $ 54,755
Adjustments to reconcile net income to cash
provided by operating activities:
Provision for loan losses 50,278 25,896
Depreciation and amortization 21,575 14,955
Stock compensation plans 1,934 1,974
Increase in interest receivable (1,679) (34,722)
Increase in accounts receivable from securitizations (50,604) (49,603)
Increase in other assets (3,792) (7,151)
(Decrease) increase in interest payable (3,207) 48,244
Increase (decrease) in other liabilities 43,428 (13,646)
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Net cash provided by operating activities 134,129 40,702
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INVESTING ACTIVITIES:
Purchases of securities available for sale (237,105) (402,807)
Proceeds from maturities of securities available for sale 99,070
Proceeds from securitization of credit card loans 600,000 1,350,000
Net increase in loans (1,302,803) (1,818,038)
Recoveries of loans previously charged off 6,464 6,304
Additions of premises and equipment, net (33,786) (25,649)
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Net cash used for investing activities (967,230) (791,120)
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FINANCING ACTIVITIES:
Net increase in interest-bearing deposits 519,462 277,894
Net decrease in other borrowings (550,303) (1,373,385)
Issuances of bank notes 864,848 2,117,369
Maturities of bank notes (222,500)
Issuances of deposit notes 200,000
Proceeds from exercise of stock options 132 132
Net proceeds from issuance of common stock 1,376 434
Dividends paid (10,248) (5,293)
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Net cash provided by financing activities 802,767 1,017,151
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(Decrease) increase in cash and cash equivalents (30,334) 266,733
Cash and cash equivalents at beginning of period 872,460 406,880
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Cash and cash equivalents at end of period $ 842,126 $ 673,613
==========================================================================================================
</TABLE>
See notes to condensed consolidated financial statements.
6
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CAPITAL ONE FINANCIAL CORPORATION
Notes to Condensed Consolidated Financial Statements
June 30, 1996
(dollars in thousands, except per share data) (unaudited)
NOTE A: BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Capital
One Financial Corporation (the "Corporation") and its subsidiaries. The
Corporation is a financial services company whose subsidiaries provide a
variety of products to consumers. The Corporation's principal subsidiary,
Capital One Bank, (the "Bank"), offers credit card products. In addition,
during June 1996, the Corporation established Capital One, F.S.B., a
federally-chartered savings bank, to provide certain consumer lending and
deposit services. The Corporation and its subsidiaries are collectively
referred to as the "Company".
The accompanying unaudited consolidated financial statements of the
Company have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete consolidated financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates. Operating results
for the three and six months ended June 30, 1996 are not necessarily indicative
of the results for the year ending December 31, 1996. The notes to the
consolidated financial statements contained in the Annual Report on Form 10-K
for the year ended December 31, 1995 should be read in conjunction with these
condensed consolidated financial statements. Certain prior period amounts have
been reclassified to conform to the 1996 presentation.
NOTE B: SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
Cash paid for interest for the six months ended June 30, 1996 and 1995
was $128,841 and $61,959, respectively. Cash paid for income taxes for the six
months ended June 30, 1996 and 1995 was $40,939 and $33,727, respectively.
EARNINGS PER SHARE
Earnings per share are based upon the weighted average number of
common and common equivalent shares outstanding, including dilutive stock
options and restricted stock.
7
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NOTE C: BORROWINGS
On April 30, 1996, the Bank amended and restated its existing $3.5
billion bank note program. Under the amended bank note program, the Bank may
issue from time to time up to $4.5 billion of senior bank notes with maturities
from 30 days to 30 years and up to $200 million of subordinated bank notes with
maturities from 5 to 30 years. At June 30, 1996, the Company had $3.1 billion
in senior bank notes outstanding. As of June 30, 1996, no subordinated bank
notes have been issued.
Also on April 30, 1996, the Bank established a deposit note program
under which the Bank may issue from time to time up to $2.0 billion of deposit
notes with maturities from 30 days to 30 years. At June 30, 1996, the Company
had $200 million in deposit notes outstanding.
In addition, in the second quarter of 1996, the Corporation filed a
registration statement for the offering from time to time of $200 million
aggregate principal amount of senior and subordinated debt and preferred stock.
NOTE D: STOCK PLANS
The Company has determined that it will continue to account for
associate stock-based compensation under Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees," and accordingly, will adopt
the disclosure provisions of SFAS No. 123, "Accounting for Stock Based
Compensation."
On April 18, 1996, stockholders approved an increase of 2,000,000 in
shares reserved for issuance under the 1994 Stock Incentive Plan, thereby
making effective the September 15, 1996 grant of performance-based options to
purchase 2,500,000 common shares at the then market price of $29.19 per share
to its Chief Executive Officer and its Chief Operating Officer. Compensation
cost of these performance-based options is measured as the difference between
the exercise price and the market price required for vesting and is recognized
over the estimated vesting period.
NOTE E: COMMITMENTS AND CONTINGENCIES
During 1995, the Corporation and the Bank became involved in three
purported class action suits relating to certain collection practices engaged
in by Signet Bank and, subsequently, by the Bank. The complaints in these
three cases allege that Signet Bank, the Corporation and/or the Bank violated a
variety of federal and state statutes and constitutional and common law duties
by filing collection lawsuits, obtaining judgments and pursuing garnishment
proceedings in the Virginia state courts against defaulted credit card
customers who were not residents of Virginia. These cases have been filed in
the Superior Court of California in the County of Alameda, Southern Division,
on behalf of a class of California residents, in the United States District
Court for the District of Connecticut on behalf of a nationwide class, and in
the United States District Court for the Middle District of Florida on behalf
of a nationwide class (except for California). The complaints in these three
cases seek unspecified statutory damages, compensatory damages, punitive
damages, restitution, attorneys' fees and costs, a permanent injunction and
other equitable relief.
8
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In connection with the transfer of substantially all of Signet Bank's
credit card business to the Bank in November 1994, the Corporation and the Bank
agreed to indemnify Signet Bank for certain liabilities incurred in litigation
arising from that business, which may include liabilities, if any, incurred in
the three purported class action cases described above. Because no specific
measure of damages is demanded in any of the complaints and each of these cases
is in early stages of litigation, an informed assessment of the ultimate
outcome of these cases cannot be made at this time. Management believes,
however, that there are meritorious defenses to these lawsuits and intends to
defend them vigorously.
The Company is commonly subject to various other pending and
threatened legal actions arising from the conduct of its normal business
activities. In the opinion of management of the Company, the ultimate
aggregate liability, if any, arising out of any pending or threatened action
will not have a material adverse effect on the consolidated financial condition
of the Company. At the present time, however, management is not in a position
to determine whether any pending or threatened litigation will have a material
adverse effect on the Company's results of operations in any future reporting
period.
NOTE F: RECENT ACCOUNTING PRONOUNCEMENTS
In June 1996, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities," which establishes the accounting for certain financial asset
transfers, including securitization transactions, and will become effective for
transactions entered into on or after January 1, 1997. The Company is
currently evaluating the impact, if any, of SFAS No. 125 on the Company's
future results of operations and financial condition.
9
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ITEM 2.
CAPITAL ONE FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
Capital One Financial Corporation (the "Corporation") is a financial
services company whose subsidiaries provide a variety of products to consumers.
The Corporation's principal subsidiary, Capital One Bank (the "Bank"), offers
credit card products. In addition, during June 1996, the Corporation
established Capital One, F.S.B., a federally-chartered savings bank, to provide
certain consumer lending and deposit services. The Corporation and its
subsidiaries are collectively referred to as the "Company". The Company is one
of the largest providers of MasterCard and Visa credit cards in the United
States with 7.8 million credit card customers and $11.2 billion in managed
loans outstanding at June 30, 1996. The Company's profitability is affected
by the net interest margin on earning assets, cardholder usage patterns, credit
quality, solicitation expenses and operating costs.
EARNINGS SUMMARY
Net income for the three months ended June 30, 1996 of $38.2 million,
or $.57 per share, compares to net income of $29.6 million, or $.45 per share,
for the same period in 1995.
The increase in net income is primarily a result of an increase in
both asset volumes and rates. Net interest income increased $29.2 million, or
65%, as average earning assets increased 12% and the net interest margin
increased to 7.13% from 4.84%. The provision for loan losses increased $7.9
million, as average loans increased 13%, the reported net charge-off rate
increased to 2.95% from 2.02% and the reported delinquency rate increased to
5.42% from 4.05%. Non-interest income increased $35.8 million, or 27%,
primarily as a result of the increase in average managed loans of 23%.
Increases in solicitation expense of $8.6 million, or 25%, and other
non-interest expense of $34.3 million, or 42%, reflect the increase in
marketing investment in existing and new product opportunities and the cost of
operations to manage the growth in accounts.
Net income for the six months ended June 30, 1996 of $76.2 million, or
$1.14 per share, compares to net income of $54.8 million, or $.83 per share,
for the same period in 1995. This 39% increase primarily reflects the growth
in loans and accounts and an improvement in the net interest margin described
above. Each component of net income is discussed in further detail in
subsequent sections of this analysis.
MANAGED LOAN PORTFOLIO
The Company analyzes its financial performance on a managed loan
portfolio basis. Managed loan data adjusts the income statement and balance
sheet to add back the effect of securitizing loans. Increases or decreases in
the interest paid by the Company on variable rate securitizations generally are
offset by corresponding increases or decreases in the amount of excess
servicing income the Company receives. The Company evaluates its interest rate
exposure on a managed portfolio basis.
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The Company's managed loan portfolio is comprised of on-balance sheet
credit card loans, credit card loans held for securitization and securitized
credit card loans. Securitized loans are not assets of the Company and,
therefore, are not shown on the balance sheet. Table 1 summarizes the Company's
managed loan portfolio.
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TABLE 1 - MANAGED LOAN PORTFOLIO
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<TABLE>
<CAPTION>
JUNE 30
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(dollars in thousands) 1996 1995
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<S> <C> <C>
PERIOD-END BALANCES:
Credit card loans held for securitization $ 1,000,000 $ 400,000
On-balance sheet credit card loans 2,569,740 2,266,293
Securitized credit card loans 7,608,801 6,276,756
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Total managed loan portfolio $ 11,178,541 $ 8,943,049
==========================================================================================================
<CAPTION>
THREE MONTHS ENDED
JUNE 30
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(dollars in thousands) 1996 1995
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<S> <C> <C>
AVERAGE BALANCES:
Credit card loans held for securitization $ 468,132 $ 290,110
On-balance sheet credit card loans 2,776,037 2,592,732
Securitized credit card loans 7,490,725 5,814,277
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Total managed loan portfolio $ 10,734,894 $ 8,697,119
==========================================================================================================
<CAPTION>
SIX MONTHS ENDED
JUNE 30
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(dollars in thousands) 1996 1995
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<S> <C> <C>
AVERAGE BALANCES:
Credit card loans held for securitization $ 400,000 $ 303,591
On-balance sheet credit card loans 2,590,669 2,321,654
Securitized credit card loans 7,507,263 5,554,579
- ----------------------------------------------------------------------------------------------------------
Total managed loan portfolio $ 10,497,932 $ 8,179,824
==========================================================================================================
</TABLE>
Since 1990, the Company has actively engaged in credit card loan
securitization transactions which are treated as sales under generally accepted
accounting principles. For securitized loans, amounts that would previously
have been reported as interest income, interest expense, service charges and
provision for loan losses are instead included in non-interest income as
servicing income. Because credit losses are absorbed against servicing income
over the life of these transactions such income may vary depending upon the
credit performance of the securitized loans. However, exposure to credit
losses on the securitized loans is contractually limited to these cash flows.
In June 1996, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities," which establishes the accounting for certain financial asset
transfers, including securitization transactions, and will become effective for
transactions entered into on or after January 1, 1997. The Company is currently
evaluating the impact, if any, of SFAS No. 125 on the Company's future results
of operations and financial condition.
11
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Table 2 indicates the impact of the credit card securitizations on the
income statement, average assets, return on average assets and net interest
margin for the periods presented. The Company intends to continue to
securitize credit card loans.
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TABLE 2 - IMPACT OF CREDIT CARD SECURITIZATIONS
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<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
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(dollars in thousands) 1996 1995 1996 1995
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<S> <C> <C> <C> <C>
STATEMENTS OF INCOME (AS REPORTED):
Net interest income $ 74,453 $ 45,222 $ 145,261 $ 83,296
Provision for loan losses 25,110 17,260 50,278 25,896
Non-interest income 170,599 134,789 341,747 264,949
Non-interest expense 159,334 116,432 315,784 236,788
- ------------------------------------------------------------------------------------------------------------
Income before income taxes 60,608 46,319 120,946 85,561
- ------------------------------------------------------------------------------------------------------------
ADJUSTMENTS FOR SECURITIZATIONS:
Net interest income 157,117 98,852 318,426 197,219
Provision for loan losses 82,611 31,076 149,407 59,901
Non-interest income (74,506) (67,776) (169,019) (137,318)
Non-interest expense - - - -
- ------------------------------------------------------------------------------------------------------------
Income before income taxes - - - -
- ------------------------------------------------------------------------------------------------------------
MANAGED STATEMENTS OF INCOME
(AS ADJUSTED):
Net interest income 231,570 144,074 463,687 280,515
Provision for loan losses 107,721 48,336 199,685 85,797
Non-interest income 96,093 67,013 172,728 127,631
Non-interest expense 159,334 116,432 315,784 236,788
- ------------------------------------------------------------------------------------------------------------
Income before income taxes $ 60,608 $ 46,319 $ 120,946 $ 85,561
============================================================================================================
OPERATING DATA AND RATIOS:
REPORTED:
Average earning assets $ 4,177,117 $ 3,736,213 $ 4,108,048 $ 3,454,687
Return on average assets 3.13% 2.85% 3.19% 2.84%
Net interest margin(1) 7.13 4.84 7.07 4.82
MANAGED:
Average earning assets $ 11,667,842 $ 9,550,490 $ 11,615,311 $ 9,009,266
Return on average assets 1.24% 1.19% 1.24% 1.16%
Net interest margin(1) 7.94 6.03 7.98 6.23
YIELD ON MANAGED PORTFOLIO 14.22 12.81 14.48 13.08
============================================================================================================
</TABLE>
(1) Net interest margin is equal to net interest income divided by average
earning assets.
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NET INTEREST INCOME
Net interest income is interest earned from the Company's loans and
securities less interest expense on borrowings, which includes certificates of
deposit in denominations of $100,000 or greater ("large denomination CDs"),
federal funds purchased, bank facility borrowings and bank and deposit notes.
Net interest income for the three months ended June 30, 1996, was
$74.5 million compared to $45.2 million for the same period in 1995,
representing an increase of $29.3 million, or 65%. For the six months ended
June 30, 1996, net interest income was $145.3 million compared to $83.3 million
for the same period in 1995, representing an increase of $62.0 million, or 74%.
Net interest income increased as a result of growth in earning assets and an
increase in net interest margin. Average earning assets increased 12% and 19%
for the three and six months ended June 30, 1996, respectively, versus the same
periods in 1995. The yield on earning assets increased 201 and 199 basis points
for the three and six months ended June 30, 1996, respectively, to 13.19% from
11.18% and to 13.19% from 11.20%, as compared to the same periods in the prior
year. The increases were primarily attributable to a 263 and a 310 basis point
increase in the yield on credit card loans for the three and six months ended
June 30, 1996, respectively, to 15.22% from 12.59% and to 15.88% from 12.78%,
as compared to the same periods in the prior year. The yield on credit card
loans increased due to the repricing of introductory rate loans to higher rates
in accordance with their respective terms over the past year, changes in
product mix and the increase in past-due fees charged as the delinquency rate
increased. An additional factor for the increased net interest margin was the
decrease in average rates paid on borrowed funds for the three and six months
ended June 30, 1996 to 6.31% from 6.89% and to 6.35% from 6.86%, respectively,
as compared to the same periods in 1995. This decrease primarily reflects
decreases in short-term market rates from period to period and the replacement
of more expensive funding established in early 1995.
The managed net interest margin for the three and six months ended
June 30, 1996 increased to 7.94% from 6.03% and to 7.98% from 6.23%,
respectively, as compared to the same periods in the prior year. This increase
was primarily the result of a 141 and 140 basis point increase in loan yield
for the three and six months ended June 30, 1996, respectively, and a reduction
of 70 and 63 basis points in borrowing costs for the same periods,
respectively, as compared to the same periods in the prior year. The increase
in loan yield to 14.22% and 14.48% for the three and six months ended June 30,
1996, respectively, from 12.81% and 13.08% for the same periods in 1995,
principally reflects the repricing of introductory rate loans, changes in
product mix and the increase in past-due fees charged on delinquent accounts as
noted above. Additionally, the decrease in average rates paid on managed
interest-bearing liabilities to 5.71% and 5.76% for the three and six months
ended June 30, 1996, respectively, versus 6.41% and 6.39% during the same
periods in 1995, reflects decreases in short-term market rates from period to
period and the replacement of more expensive funding established in early 1995.
13
<PAGE> 14
Table 3 provides average balance sheet data, an analysis of net
interest income, net interest spread (the difference between the yield on
earning assets and the cost of interest-bearing liabilities) and net interest
margin for the three and six months ended June 30, 1996 and 1995.
- --------------------------------------------------------------------------------
TABLE 3 - STATEMENTS OF AVERAGE BALANCES, INCOME AND EXPENSE, YIELDS AND RATES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30
- ---------------------------------------------------------------------------------------------------------------------
(dollars in thousands) 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
=====================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Earning assets
Credit card loans (1) $ 3,244,169 $ 123,403 15.22 % $ 2,882,842 $ 90,741 12.59 %
Federal funds sold 336,979 4,487 5.33 347,205 5,255 6.05
Other securities 595,969 9,863 6.62 506,166 8,436 6.67
- ---------------------------------------------------------------------------------------------------------------------
Total earning assets 4,177,117 $ 137,753 13.19 % $ 3,736,213 $ 104,432 11.18 %
Cash and due from banks 4,764 2,321
Allowance for loan losses (74,001) (67,917)
Premises and equipment, net 152,290 114,283
Other assets 615,366 377,424
- ---------------------------------------------------------------------------------------------------------------------
Total assets $ 4,875,536 $ 4,162,324
=====================================================================================================================
LIABILITIES AND EQUITY:
Interest-bearing liabilities
Deposits $ 788,802 $ 11,031 5.59 % $ 741,575 $ 12,210 6.59 %
Federal funds purchased 300,329 4,104 5.47 686,546 11,023 6.42
Bank facility 48,297 1,463 12.12 156,592 2,920 7.46
Bank and deposit notes 2,875,119 46,702 6.50 1,853,545 33,057 7.13
- ---------------------------------------------------------------------------------------------------------------------
Total interest-bearing
liabilities 4,012,547 $ 63,300 6.31 % 3,438,258 $ 59,210 6.89 %
Other liabilities 223,243 195,664
- ---------------------------------------------------------------------------------------------------------------------
Total liabilities 4,235,790 3,633,922
Equity 639,746 528,402
- ---------------------------------------------------------------------------------------------------------------------
Total liabilities and equity $ 4,875,536 $ 4,162,324
=====================================================================================================================
Net interest spread 6.88 % 4.29 %
=====================================================================================================================
Interest income to
average earning assets 13.19 % 11.18 %
Interest expense to
average earning assets 6.06 6.34
- ---------------------------------------------------------------------------------------------------------------------
Net interest margin 7.13 % 4.84 %
=====================================================================================================================
</TABLE>
(1) Interest income includes past-due fees on loans of $19,525 and $10,880 for
the three months ended June 30, 1996 and 1995, respectively.
14
<PAGE> 15
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
- ---------------------------------------------------------------------------------------------------------------------
(dollars in thousands) 1996 1995
- ---------------------------------------------------------------------------------------------------------------------
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
=====================================================================================================================
<S> <C> <C> <C> <C> <C>
ASSETS:
Earning assets
Credit card loans (1) $ 2,990,669 $ 237,514 15.88 % $ 2,625,245 $ 167,755 12.78 %
Federal funds sold 464,085 12,464 5.37 446,592 13,265 5.94
Other securities 653,294 20,917 6.40 382,850 12,479 6.52
- ---------------------------------------------------------------------------------------------------------------------
Total earning assets 4,108,048 $ 270,895 13.19 % 3,454,687 $ 193,499 11.20 %
Cash and due from banks 33,017 3,006
Allowance for loan losses (73,981) (67,598)
Premises and equipment, net 147,653 110,922
Other assets 566,512 357,767
- ---------------------------------------------------------------------------------------------------------------------
Total assets $ 4,781,249 $ 3,858,784
=====================================================================================================================
LIABILITIES AND EQUITY:
Interest-bearing liabilities
Deposits $ 823,742 $ 23,574 5.72 % $ 666,606 $ 21,933 6.58 %
Federal funds purchased 369,473 10,392 5.63 617,734 19,722 6.39
Bank facility 68,297 3,523 10.32 494,198 17,585 7.12
Bank and deposit notes 2,692,439 88,145 6.55 1,433,346 50,963 7.11
- ---------------------------------------------------------------------------------------------------------------------
Total interest-bearing
liabilities 3,953,951 $ 125,634 6.35 % 3,211,884 $ 110,203 6.86 %
Other liabilities 190,155 133,573
- ---------------------------------------------------------------------------------------------------------------------
Total liabilities 4,144,106 3,345,457
Equity 637,143 513,327
- ---------------------------------------------------------------------------------------------------------------------
Total liabilities and equity $ 4,781,249 $ 3,858,784
=====================================================================================================================
Net interest spread 6.84 % 4.34 %
- ---------------------------------------------------------------------------------------------------------------------
Interest income to
average earning assets 13.19 % 11.20 %
Interest expense to
average earning assets 6.12 6.38
- ---------------------------------------------------------------------------------------------------------------------
Net interest margin 7.07 % 4.82 %
=====================================================================================================================
</TABLE>
(1) Interest income includes past-due fees on loans of $35,010 and $21,074 for
the six months ended June 30, 1996 and 1995, respectively.
15
<PAGE> 16
INTEREST VARIANCE ANALYSIS
Net interest income is affected by changes in the average interest
rate earned on earning assets and the average interest rate paid on
interest-bearing liabilities. In addition, net interest income is affected by
changes in the volume of earning assets and interest-bearing liabilities. Table
4 sets forth the dollar amount of the increase (decrease) in interest income
and interest expense resulting from changes in the volume of earning assets and
interest-bearing liabilities and from changes in yields and rates for the three
and six months ended June 30, 1996 versus the comparable periods in the prior
year.
- --------------------------------------------------------------------------------
TABLE 4 - INTEREST VARIANCE ANALYSIS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1996 VS 1995 JUNE 30, 1996 VS 1995
- ----------------------------------------------------------------------------------------------------------
INCREASE CHANGE DUE TO* INCREASE CHANGE DUE TO*
(dollars in thousands) (DECREASE) VOLUME RATE (DECREASE) VOLUME RATE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INTEREST INCOME
Credit card loans $ 32,662 $ 12,263 $ 20,399 $ 69,759 $ 25,417 $ 44,342
Federal funds sold (768) (151) (617) (801) 505 (1,306)
Other securities 1,427 1,487 (60) 8,438 8,663 (225)
- ----------------------------------------------------------------------------------------------------------
Total interest income 33,321 13,202 20,119 77,396 39,944 37,452
INTEREST EXPENSE
Deposits (1,179) 743 (1,922) 1,641 4,736 (3,095)
Federal funds purchased (6,919) (5,471) (1,448) (9,330) (7,198) (2,132)
Bank facility (1,457) (2,682) 1,225 (14,062) (19,633) 5,571
Bank and deposit notes 13,645 16,820 (3,175) 37,182 41,514 (4,332)
- ----------------------------------------------------------------------------------------------------------
Total interest expense 4,090 9,337 (5,247) 15,431 24,035 (8,604)
- ----------------------------------------------------------------------------------------------------------
Net interest income* $ 29,231 $ 5,840 $ 23,391 $ 61,965 $ 17,873 $ 44,092
==========================================================================================================
</TABLE>
*The change in interest due to volume and rate has been allocated in proportion
to the relationship of the absolute dollar amounts of the change in each. The
changes in income and expense are calculated independently for each line in the
schedule. The totals for the volume and rate columns are not the sum of the
individual lines.
SERVICING INCOME
Servicing income increased $9.3 and $36.0 million, or 9% and 18%, for
the three and six months ended June 30, 1996, respectively, from the same
periods in 1995, primarily due to increases in net interest income offset by
increased charge-offs on securitized loans. Average securitized loans
increased 29% and 35% for the three and six months ended June 30, 1996 compared
to the same periods in the prior year. Net interest income on securitized
loans increased $58.3 and $121.2 million, or 59% and 61%, for the three and six
months ended June 30, 1996, respectively, as a result of the loan growth and an
increase in the net interest margin to 8.39% and 8.48% for the three and six
months ended June 30, 1996, respectively, from 6.80% and 7.10% for the same
periods in the prior year. This increase in net interest margin is the result
of an increase in yield on securitized loans of 86 and 71 basis points for the
three and six months ended June 30, 1996, respectively, as a result of
repricing introductory rate accounts and a decrease for the same periods in
the cost of funds of 72 and 67 basis points as short-term rates declined from
the same periods in
16
<PAGE> 17
the prior year. Charge-offs on securitized loans for the three and six months
ended June 30, 1996 increased $51.5 and $89.5 million, respectively, or 166%
and 149%, for the same periods compared to the prior year due to the increase
in average securitized loans, an increase in the average age of accounts
(generally referred to as "seasoning") and general economic trends in consumer
credit performance.
OTHER NON-INTEREST INCOME
Other non-interest income increased 76% and 64%, to $61.5 and $104.4
million for the three and six months ended June 30, 1996, compared to $35.0 and
$63.7 million for the same periods in the prior year. The increase was due to
the 28% increase in the average number of accounts for both the three and six
months ended June 30, 1996, respectively, an increase in charge volume and a
shift to more fee-based products.
NON-INTEREST EXPENSE
Non-interest expense for the three and six months ended June 30, 1996
was $159.3 and $315.8 million, respectively, an increase of 37% and 33% over
$116.4 and $236.8 million, for the same periods in the prior year. Contributing
to the increase in non-interest expense were solicitation expenses, which rose
$8.6 and $19.1 million to $42.7 and $94.3 million, or 25% for the three and six
months ended June 30, 1996, respectively, compared to $34.1 and $75.2 million
for the same periods in the prior year. This increase represents the
Company's continued investment in new products and services (see "Business
Outlook" for further discussion). All other non-interest expenses increased
$34.3 and $59.9 million, or 42% and 37%, to $116.6 and $221.5 million for the
three and six months ended June 30, 1996, respectively, from $82.3 and $161.6
million in the same periods in the prior year. The increase in other
non-interest expense was primarily as a result of the 28% increase in the
average number of accounts for both periods, an increase in charge volume, an
increase in salaries and benefits costs and certain costs associated with
information systems enhancements.
INCOME TAXES
The Company's effective income tax rate increased to 37% for the three
and six months ended June 30, 1996 as compared to 36% for the same periods in
1995 and includes both state and federal income tax components.
ASSET QUALITY
The asset quality of a portfolio is generally a function of the
following: the initial underwriting criteria used, seasoning of the accounts,
account management activities and geographic, demographic, or other forms of
concentration, as well as general economic conditions. The average age of the
accounts is an important indicator of the stability of delinquency and loss
levels; a portfolio consisting of older accounts generally behaves more
predictably than a newly generated portfolio. New accounts initially exhibit a
rising trend of delinquency and credit losses which reaches a more steady state
of delinquency and net losses generally within three years from origination.
17
<PAGE> 18
DELINQUENCIES
Table 5 shows loan delinquency trends for the periods presented on a
reported and managed loan basis. The entire balance of an account is
contractually delinquent if the minimum payment is not received by the billing
date. The Company generally continues to accrue interest until the loan is
charged off.
- --------------------------------------------------------------------------------
TABLE 5 - DELINQUENCIES*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30
- ---------------------------------------------------------------------------------------------------------
1996 1995
- ---------------------------------------------------------------------------------------------------------
% OF % OF
(dollars in thousands) LOANS TOTAL LOANS LOANS TOTAL LOANS
=========================================================================================================
<S> <C> <C> <C> <C>
REPORTED:
Loans outstanding $ 3,569,740 100.00% $ 2,666,293 100.00%
Loans delinquent:
30 - 59 days 76,784 2.15 39,415 1.48
60 - 89 days 38,976 1.09 22,144 .83
90 or more days 77,845 2.18 46,342 1.74
- ---------------------------------------------------------------------------------------------------------
Total $ 193,605 5.42% $ 107,901 4.05%
=========================================================================================================
MANAGED:
Loans outstanding $ 11,178,541 100.00% $ 8,943,049 100.00%
Loans delinquent:
30 - 59 days 187,209 1.68 104,203 1.17
60 - 89 days 101,141 .90 57,608 .64
90 or more days 224,970 2.01 112,332 1.26
- ---------------------------------------------------------------------------------------------------------
Total $ 513,320 4.59% $ 274,143 3.07%
=========================================================================================================
</TABLE>
*Includes credit card loans held for securitization.
The delinquency rate for reported loans was 5.42% at June 30, 1996, up
from the 4.05% for the same date in 1995 and down from 6.07% at March 31, 1996.
The increase in the reported delinquency rate from June 30, 1995 to June 30,
1996 reflects seasoning of the Company's retained interests in securitization
trusts, industry-wide softening in the performance of consumer loans and growth
in the non-balance transfer product portfolio, such as secured cards, affinity
and co-branded cards, joint account cards, college student cards and other
cards targeted to other non-balance transfer market segments, offset by newer
loan originations. The Company's non-balance transfer products historically
have higher delinquency rates than the typical balance transfer loans. In the
case of secured card loans, collateral reduces any ultimate charge-off. The
costs associated with higher delinquency and potentially higher charge-off
rates are considered in pricing of individual products. The 65 basis point
decrease in the reported delinquency rate to 5.42% at June 30, 1996 from 6.07%
at March 31, 1996 is primarily attributable to the 38% new growth in reported
loans period over period.
The delinquency rate for the managed loan portfolio was 4.59% at June
30, 1996, up from the 3.07% for the same date in 1995 and up from 4.51% at
March 31, 1996. The managed portfolio's delinquency rate at June 30, 1996
reflected the factors discussed above as well as the seasoning of the accounts
and loan balances.
18
<PAGE> 19
NET CHARGE-OFFS
Net charge-offs include the principal amount of losses (excluding
accrued and unpaid finance charges, fees and fraud losses) less current period
recoveries. Table 6 presents the Company's net charge-offs for the periods
presented on a reported and managed basis.
- --------------------------------------------------------------------------------
TABLE 6 - NET CHARGE-OFFS*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
- ---------------------------------------------------------------------------------------------------------
(dollars in thousands) 1996 1995 1996 1995
=========================================================================================================
<S> <C> <C> <C> <C>
REPORTED:
Average loans outstanding $ 3,244,169 $ 2,882,842 $ 2,990,669 $ 2,625,245
Net charge-offs 23,956 14,536 47,772 21,715
Net charge-offs as a percentage
of average loans outstanding 2.95% 2.02% 3.19% 1.65%
=========================================================================================================
MANAGED:
Average loans outstanding $ 10,734,894 $ 8,697,119 $ 10,497,932 $ 8,179,824
Net charge-offs 106,567 45,612 197,179 81,616
Net charge-offs as a percentage
of average loans outstanding 3.97% 2.10% 3.76% 2.00%
=========================================================================================================
</TABLE>
*Includes credit card loans held for securitization.
Net charge-offs of managed loans increased $61.0 and $115.6 million,
or 134% and 142%, for the three and six months ended June 30, 1996 from the
comparable periods in the prior year. For the three and six months ended June
30, 1996, the Company's net charge-offs as a percentage of managed loans was
3.97% and 3.76%, respectively, compared to 2.10% and 2.00% for the same periods
in the prior year. This increase in net charge-offs is the result of continued
seasoning of the portfolio and the industry-wide softening in the performance of
consumer loans.
PROVISION AND ALLOWANCE FOR LOAN LOSSES
The provision for loan losses is the periodic expense of maintaining
an adequate allowance at the amount estimated to be sufficient to absorb
possible future losses, net of recoveries (including recovery of collateral),
inherent in the existing on-balance sheet loan portfolio. In evaluating the
adequacy of the allowance for loan losses, the Company takes into consideration
several factors including economic trends and conditions, overall asset
quality, loan seasoning and trends in delinquencies and expected charge-offs.
The Company's primary guideline is a calculation which uses current
delinquency levels and other measures of asset quality to estimate net
charge-offs. Credit card loans are typically charged off when they are six
months past-due, unless the customer is determined to be bankrupt, in which
case the account is generally charged off within 30 days of verification. Once
a loan is charged off, it is the Company's policy to continue to pursue the
collection of principal and interest.
Management believes that the allowance for loan losses is adequate to
cover anticipated losses in the on-balance sheet loan portfolio under current
conditions. There can be no assurance as to the future
19
<PAGE> 20
credit losses that may be incurred in connection with the Company's loan
portfolio, nor can there be any assurance that the loan loss allowance that has
been established by the Company will be sufficient to absorb such future credit
losses. The allowance is a general allowance applicable to the entire
on-balance sheet loan portfolio. Table 7 sets forth the activity in the
allowance for loan losses for the periods indicated.
- --------------------------------------------------------------------------------
TABLE 7 - SUMMARY OF ALLOWANCE FOR LOAN LOSSES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
- ----------------------------------------------------------------------------------------------------------
(dollars in thousands) 1996 1995 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE AT BEGINNING OF PERIOD $ 74,000 $ 68,516 $ 72,000 $ 68,516
Provision for loan losses 25,110 17,260 50,278 25,896
Net deduction arising in securitization
transactions (5,984) (2,200) (8,109) (5,128)
Loans charged off (22,502) (16,396) (46,633) (25,072)
Recoveries of loans previously
charged off 3,376 3,336 6,464 6,304
- ----------------------------------------------------------------------------------------------------------
Net loans charged off* (19,126) (13,060) (40,169) (18,768)
- ----------------------------------------------------------------------------------------------------------
BALANCE AT END OF PERIOD $ 74,000 $ 70,516 $ 74,000 $ 70,516
==========================================================================================================
Allowance for loan losses to
loans at period-end* 2.88% 3.11% 2.88% 3.11%
==========================================================================================================
</TABLE>
*Excludes credit card loans held for securitization.
For the three and six months ended June 30, 1996, the provision
increased to $25.1 and $50.3 million, respectively, from $17.3 and $25.9
million in the comparable periods of the prior year. This increase is due to an
increase in the average reported loan balance of 13% and 14%, to $3.2 and $3.0
billion for the three and six months ended June 30, 1996, respectively, from
$2.9 and $2.6 billion in the comparable periods of the prior year, increases in
the net charge-off rate and the delinquency rate, as well as a shift in the
composition of the reported loans and seasoning of the portfolio. Growth in
non-balance transfer products, which have historically higher charge-off rates
than balance transfer products, increases the amount of provision necessary to
absorb credit losses.
LIQUIDITY AND FUNDING
Liquidity refers to the Company's ability to meet its cash needs. The
Company meets its cash requirements by securitizing assets and by debt funding.
A significant source of liquidity for the Company has been the securitization of
credit card loans. Maturity terms of the existing securitizations vary from
1996 to 2000 and typically have accumulation periods during which principal
payments are aggregated to make payments to investors. As payments on the loans
are accumulated for the participants in the securitization and are no longer
reinvested in new loans, the Company's funding requirements for such new loans
increase accordingly. The occurrence of certain events may cause the
securitization transactions to amortize earlier than scheduled which would
accelerate the need for funding.
As such loans amortize or are otherwise paid, the Company's funding
needs will increase accordingly. The Company believes that it can securitize
credit card loans, purchase federal funds and establish other funding sources to
fund the amortization or other payment of the securitizations in the
20
<PAGE> 21
future, although no assurance can be given to that effect.
The Company maintains a portfolio of high-quality securities such as
U.S. Government, Eurodollar and federal funds representing in excess of 10% of
managed assets at June 30, 1996 in order to provide adequate liquidity and to
meet its on-going cash needs. At June 30, 1996, the Company held approximately
$1.1 billion in such securities with maturities of 90 days or less.
Interest-bearing liabilities increased $1.2 billion, or 35%, to $4.8
billion at June 30, 1996 from $3.6 billion at March 31, 1996. Interest-bearing
deposits and bank notes increased $511 and $635 million, respectively, from
March 31, 1996 to June 30, 1996. The Company also issued $200 million of
deposit notes during the quarter. These increases in interest-bearing
liabilities are the result of the need for funding the quarter's loan growth.
Table 8 shows the maturation of large denomination CDs at June 30, 1996
- --------------------------------------------------------------------------------
TABLE 8 - MATURITIES OF DOMESTIC LARGE DENOMINATION CDS OF $100,000
OR MORE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1996
- --------------------------------------------------------------------------------------------------------
(dollars in thousands) BALANCE PERCENT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
3 months or less $ 926,280 94.76%
Over 3 through 6 months 11,534 1.18
Over 6 through 12 months 39,706 4.06
- --------------------------------------------------------------------------------------------------------
Total $ 977,520 100.00%
========================================================================================================
</TABLE>
The Company also had $65 million outstanding on its $1.7 billion
revolving credit arrangement. The additional unused commitment is available as
funding needs may arise.
On April 30, 1996, the Bank amended and restated its existing $3.5
billion bank note program. Under the amended bank note program, the Bank may
issue from time to time up to $4.5 billion of senior bank notes with maturities
from 30 days to 30 years and up to $200 million of subordinated bank notes with
maturities from 5 to 30 years. At June 30, 1996, the Company had $3.1 billion
in senior bank notes outstanding. As of June 30, 1996, no subordinated bank
notes have been issued.
Also on April 30, 1996, the Bank established a deposit note program
under which the Bank may issue from time to time up to $2.0 billion of deposit
notes with maturities from 30 days to 30 years from the date of issue. At June
30, 1996, the Company had $200 million in deposit notes outstanding.
In addition, in the second quarter of 1996, the Corporation filed a
registration statement for the offering from time to time of $200 million
aggregate principal amount of senior and subordinated debt and preferred stock.
In January 1996, the Company implemented a dividend reinvestment and
stock purchase plan (the "DRIP") to provide existing stockholders with the
opportunity to purchase additional
21
<PAGE> 22
shares of the Company's common stock by reinvesting quarterly dividends or
making optional cash investments. The Company uses proceeds from the DRIP for
general corporate purposes.
During June 1996, upon the approval of the Office of Thrift
Supervision, the Company established a new subsidiary Capital One, F.S.B., an
FDIC-insured federal savings bank, with an initial capital contribution of $25
million. Capital One, F.S.B. will permit the expansion of the Company's
information-based strategy into other consumer financial products.
CAPITAL ADEQUACY
At June 30, 1996, the Bank's risk-based Tier I capital ratio was
10.97%, its risk-based total capital ratio was 12.23% and its Tier I leverage
ratio was 9.91%. The Bank's ratio of common equity to managed assets was
4.96%. The Company anticipates maintaining a strong capital position. The
Bank is subject to the capital adequacy guidelines adopted by the Federal
Reserve Board. At June 30, 1996, the Bank exceeded the requirements of a
"well-capitalized" institution as defined in the Federal Deposit Insurance
Corporation Improvement Act of 1991.
During the second quarter of 1996, the Bank received final regulatory
approval to establish a branch office in the United Kingdom. In connection
with such approval, the Company committed to the Federal Reserve Board that,
for so long as the Bank maintains such branch in the United Kingdom, the
Company will maintain a minimum Tier I leverage ratio of 3.0%. At June 30,
1996 the Company's Tier I leverage ratio was 13.54%.
Capital One, F.S.B. is subject to capital adequacy guidelines adopted
by the Office of Thrift Supervision. At June 30, 1996, Capital One, F.S.B.'s
tangible capital ratio was 9.51%, its risk-based capital ratio was 483.15% and
its leverage ratio was 9.51%, which reflect the start-up nature of its
operations. At June 30, 1996, Capital One, F.S.B. also exceeded the
requirements of a "well-capitalized" institution as defined in the Federal
Deposit Insurance Corporation Improvement Act of 1991.
OFF-BALANCE SHEET RISK
The Company is subject to off-balance sheet risk in the normal course
of business including commitments to extend credit, excess servicing income
from securitization and interest rate swap agreements ("swaps"). In order to
reduce interest rate sensitivity and to match asset and liability repricings,
the Company has entered into swaps which involve elements of credit or interest
rate risk in excess of the amount recognized on the balance sheet. Swaps
present the Company with certain credit, market, legal and operational risks.
The Company has established credit policies to manage these risks.
22
<PAGE> 23
At June 30, 1996, the Company had $2.4 billion in notional amount of
swaps to match asset and liability repricings, the majority of which reduce
exposure relating to the mismatch of quarterly repricing credit card loan
assets and medium-term fixed rate bank notes. The fair value, based on the
forward yield curve, at June 30, 1996 of swap positions for which the Company
is exposed to credit risk from counterparties is $35.7 million. Tables 9 and
10 reflect the maturity and activity of swap positions, respectively, at June
30, 1996 and for the three and six months then ended.
- --------------------------------------------------------------------------------
TABLE 9 - MATURITY OF INTEREST RATE SWAPS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
JUNE 30, 1996
- --------------------------------------------------------------------------------------------------------
WITHIN OVER ONE AVERAGE
ONE TO FIVE LIFE
(dollars in millions) YEAR YEARS TOTAL (YEARS)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST RATE SWAPS:
RECEIVE FIXED/PAY FLOATING:
Notional amount $ 524 $ 1,580 $ 2,104 1.77
Weighted average rates received 7.99% 7.28% 7.45%
Weighted average rates paid 5.56% 5.54% 5.55%
RECEIVE FLOATING/PAY FLOATING:
Notional amount $ 260 $ 260 0.06
Weighted average rates received 5.43% 5.43%
Weighted average rates paid 5.51% 5.51%
========================================================================================================
</TABLE>
Weighted average rates received and paid are based on the contractual rates in
effect at June 30, 1996. Floating rates under the interest rate swap contracts
are based on varying terms of LIBOR.
- --------------------------------------------------------------------------------
TABLE 10 - SUMMARY OF INTEREST RATE SWAPS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30
1996 1995 1996 1995
- --------------------------------------------------------------------------------------------------------
(dollars in millions) NOTIONAL AMOUNT NOTIONAL AMOUNT
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RECEIVE FLOATING/PAY FIXED:
Beginning of period $ 600
Additions $ 4,800
Maturities 600 4,800
- --------------------------------------------------------------------------------------------------------
End of period $ - $ - $ $ -
========================================================================================================
RECEIVE FIXED/PAY FLOATING:
Beginning of period $ 2,104 $ 2,144 $ 2,144 $ 539
Additions 1,605
Maturities 40
- --------------------------------------------------------------------------------------------------------
End of period $ 2,104 $ 2,144 $ 2,104 $ 2,144
========================================================================================================
RECEIVE FLOATING/PAY FLOATING:
Beginning of period $ 260 $ 260 $ 260
Additions $ 260
- --------------------------------------------------------------------------------------------------------
End of period $ 260 $ 260 $ 260 $ 260
========================================================================================================
</TABLE>
23
<PAGE> 24
BUSINESS OUTLOOK
This business outlook section summarizes the Company's expectations for
earnings for the year ending December 31, 1996 and its primary goals and
strategies for continued growth. The statements contained in this section are
based on management's current expectations. Certain of the statements are
forward looking statements, and actual results could differ materially.
Factors which could materially influence results are set forth in the last
paragraph of this section and in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995 (Part I, Item I, Cautionary Statements).
Consistent with Company targets, the Company expects that earnings per
share for the year ending December 31, 1996, will increase by approximately 20%
over earnings per share for the year ended December 31, 1995 and will result in
a return on equity in excess of 20%.
The Company's strategy for future growth has been, and it is expected
will continue to be, to apply its proprietary information-based strategy
("IBS") to its credit card business as well as to other businesses, both
financial and non-financial, to identify new product opportunities. See the
Company's Annual Report on Form 10-K for the year ended December 31, 1995 for a
further description of the Company's IBS (Part I, Item 1, Business).
Coincident with its growth strategy, the Company expects to increase
substantially its marketing (solicitation) expenses in 1996, as compared to
1995, and to invest in new products or services that management believes will
produce above 20% target earnings growth and return on equity.
Historically, the Company has concentrated its efforts on credit card
opportunities. These opportunities have included, and it is expected will
continue to include, various low-rate balance transfer products, as well as
other non-balance transfer credit card products. Generally, these non-balance
transfer credit card products tend to have lower credit lines, balances that
build over time, less attrition, higher margins (including fees), higher
operational costs and, in some cases, higher delinquencies and credit losses
than the Company's traditional low-rate balance transfer products. In general,
these non-balance transfer products have overall higher returns than the
traditional balance transfer products in current market conditions. The
Company uses its IBS in an effort to balance the mix of credit card products to
optimize profitability within the context of acceptable risk. The Company
expects that its growth in credit card accounts and managed loans outstanding
will continue through calendar year 1996 with a mix of balance transfer and
non-balance transfer products. Actual growth quarter over quarter and year
over year may vary, however, as the Company plans to remain flexible in the
allocation of marketing expenses spent on specific products to take advantage
of market opportunities as they emerge.
The Company also has been applying, and expects to continue applying,
its IBS to other financial products and non-financial products. The Company is
in various stages of developing and testing a number of new products or
services -- ranging from the early stages of testing to advanced stages of
analyzing test results. To date, the Company has not spent a material portion
of its marketing expenses on non-card products. However, as the Company
continues to explore non-card opportunities and when it begins to market these
products more broadly, the Company expects that the percentage of marketing
expenses applied to non-card products or services will increase significantly
over time.
The Company expects to maintain a flexible approach to its marketing
investment. The Company intends to continue applying its IBS to all products,
even established products and businesses, and the results of ongoing testing
will influence the amount and allocation of future marketing investment.
Management believes that, through the continued application of IBS, the
24
<PAGE> 25
Company can develop product and service offerings to sustain growth, and that
it has the personnel, financial resources and business strategy necessary for
continued success. As the Company attempts to diversify and expand its product
offerings, however, there can be no assurance that the historical financial
information of the Company will necessarily reflect the results of operations
and financial condition of the Company in the future. The Company's actual
results will be influenced by, among other things, the factors discussed in
this section.
The Company's strategies and objectives outlined above and the other
forward looking statements contained in this section involve a number of risks
and uncertainties. The Company cautions readers that any forward looking
information is not a guarantee of future performance and that actual results
could differ materially. In addition to the factors discussed above, among the
other factors that could cause actual results to differ materially are the
following: continued intensive competition from numerous providers of products
and services which compete with the Company's businesses; with respect to
financial products, changes in the Company's aggregate accounts or loan
balances and the growth rate thereof, including changes resulting from factors
such as shifting product mix, amount of actual marketing expenses made by the
Company, and attrition of accounts and loan balances; an increase in credit
losses (including increases due to a worsening of general economic conditions);
difficulties or delays in the development, production, testing and marketing of
new products or services; losses associated with new products or services;
financial, legal, regulatory or other difficulties that may affect investment
in, or the overall performance of, a product or business; the amount, and rate
of growth in, the Company's expenses (including associate and marketing
(solicitation) expenses) as the Company's business develops or changes or as it
expands into new market areas; the availability of capital necessary to fund
the Company's new businesses; the ability of the Company to build the
operational and organizational infrastructure necessary to engage in new
businesses; the ability of the Company to recruit experienced personnel to
assist in the management and operations of new products and services; and
other factors listed from time to time in the Company's SEC reports, including
but not limited to the Annual Report on Form 10-K for the year ended December
31, 1995 (Part I, Item 1, Cautionary Statements).
25
<PAGE> 26
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
The following exhibits are filed herewith.
EXHIBIT
NUMBER DESCRIPTION
4.1 Amended and Restated Issuing and
Paying Agency Agreement dated as of
April 30, 1996 between Capital One
Bank and Chemical Bank (including
exhibits A-1, A-2, A-3 and A-4
thereto).
4.2 Issuing and Paying Agency Agreement
dated as of April 30, 1996 between
Capital One Bank and Chemical Bank
(including exhibits A-1 and A-2
thereto).
10.1 Amended and Restated Distribution
Agreement dated April 30, 1996 among
Capital One Bank and the agents
named therein.
10.2 Distribution Agreement dated April
30, 1996 among Capital One Bank and
the agents named therein.
10.3 First Amendment to Operative
Documents dated as of June 5, 1996
among Capital One Bank, as
construction agent and as lessee,
First Security Bank of Utah, N.A.,
as owner/trustee for the COB Real
Estate Trust 1995-1,
NationsBank of Texas, N.A., as
administrative agent, as
initial lender and as initial
holder named therein.
11 Computation of Per Share Earnings
(b) The Company filed a Current Report on Form 8-K dated July 2,
1996, Commission File No. 1-13300, announcing the
establishment of Capital One F.S.B.
26
<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
CAPITAL ONE FINANCIAL CORPORATION
---------------------------------
(Registrant)
Date: August 14, 1996 /s/James M. Zinn
---------------------------------
James M. Zinn
Senior Vice President,
Chief Financial Officer
(Chief Accounting Officer
and duly authorized officer
of the Registrant)
27
<PAGE> 28
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE NUMBER
------ ----------- -----------
<S> <C> <C>
4.1 Amended and Restated Issuing and Paying Agency Agreement
dated as of April 30, 1996 between Capital One Bank and
Chemical Bank (including exhibits A-1, A-2, A-3 and A-4 thereto). 29
4.2 Issuing and Paying Agency Agreement dated as of April 30, 1996
between Capital One Bank and Chemical Bank (including exhibits
A-1 and A-2 thereto). 132
10.1 Amended and Restated Distribution Agreement dated April 30,
1996 among Capital One Bank and the agents named therein. 195
10.2 Distribution Agreement dated April 30, 1996 among Capital One
Bank and the agents named therein. 259
10.3 First Amendment to Operative Documents dated as of June 5, 1996
among Capital One Bank, as construction agent and as lessee, First
Security Bank of Utah, N.A., as owner/trustee for the COB Real Estate
Trust 1995-1, NationsBank of Texas, N.A., as administrative agent, as
initial lender and as initial holder named therein. 322
11 Computation of Per Share Earnings 337
</TABLE>
28
<PAGE> 1
EXHIBIT 4.1
CAPITAL ONE BANK
AMENDED AND RESTATED ISSUING AND PAYING AGENCY AGREEMENT
THIS AGREEMENT, dated as of April 30, 1996, between Capital One
Bank, a banking association chartered under the laws of the Commonwealth of
Virginia (the "Bank") and Chemical Bank, as issuing and paying agent (the
"Issuing and Paying Agent," which term shall also refer to any duly appointed
successor thereto).
WITNESSETH:
Section 1. Appointment of Issuing and Paying Agent. The Bank
proposes to issue from time to time its Bank Notes (each, a "Bank Note" and
collectively, the "Bank Notes") in such amounts as may be duly authorized by
the Bank pursuant to the Amended and Restated Distribution Agreement, dated
April 30, 1996 (the "Distribution Agreement"), among the Bank and the agents
named therein (the "Agents").
Each Bank Note will be issued in book-entry form and will be
represented by a global certificate (each, a "Global Bank Note" and
collectively, the "Global Bank Notes") registered in the name of The
Depository Trust Company, as depository ("DTC," which term includes any
successor thereof), or a nominee thereof (which successor shall be a clearing
agency registered under the Securities Exchange Act of 1934, as amended, if so
required by applicable law) (each beneficial interest in a Global Bank Note, a
"Book-Entry Bank Note" and collectively, the "Book-Entry Bank Notes").
The Bank hereby appoints the Issuing and Paying Agent to act, on the
terms and conditions specified herein, as issuing and paying agent for the
Global Bank Notes and as registrar, transfer agent and authenticating agent
for the Global Bank Notes and to perform such other responsibilities as are
described herein and the Issuing and Paying Agent hereby accepts such
appointments. The aggregate principal amount of the Global Bank Notes which
may be issued pursuant to this Agreement outstanding at any one time is
unlimited.
The Issuing and Paying Agent shall exercise due care in the
performance of its obligations hereunder and shall perform such obligations in
a manner consistent with industry standards.
<PAGE> 2
Section 2. Global Bank Note Forms; Terms; Execution.
(i) The Global Bank Notes shall be substantially (A) in the
form set forth in Exhibit A-1 hereto if such Global Bank Note is a Senior Bank
Note (each, a "Senior Bank Note" and collectively, the "Senior Bank Notes")
and bears interest at a fixed rate of interest (each such Global Bank Note, a
"Fixed Rate Global Senior Bank Note" and collectively, the "Fixed Rate Global
Senior Bank Notes"), (B) in the form of Exhibit A-2 hereto if such Global Bank
Note is a Senior Bank Note and bears interest at a floating rate of interest
determined by reference to an interest rate basis specified therein (each such
Global Bank Note, a "Floating Rate Global Senior Bank Note" and collectively,
the "Floating Rate Global Senior Bank Notes"), (C) in the form of Exhibit A-3
hereto if such Global Bank Note is a Subordinated Bank Note (each, a
"Subordinated Bank Note" and collectively, the "Subordinated Bank Notes") and
bears interest at a fixed rate of interest (each such Global Bank Note, a
"Fixed Rate Global Subordinated Bank Note" and collectively, the "Fixed Rate
Global Subordinated Bank Notes"), (D) in the form of Exhibit A-4 hereto if
such Global Bank Note is a Subordinated Bank Note and bears interest at a
floating rate of interest determined by reference to an interest rate basis
specified therein (each such Global Bank Note, a "Floating Rate Global
Subordinated Bank Note" and collectively, the "Floating Rate Global
Subordinated Bank Notes"), or (E) in such other form as the Bank may from time
to time designate.
(ii) Each Senior Bank Note issued by the Bank shall have a
maturity of 30 days to 30 years from its original date of issuance, and each
Subordinated Bank Note issued by the Bank shall have a maturity from five
years to 30 years from its original date of issue. The Book-Entry Bank Notes
shall be issued in minimum denominations of $250,000 and in integral multiples
of $1,000 in excess thereof.
The interest rate borne by any particular Global Bank Note may vary
from the interest rates borne by any other Global Bank Notes. Any such
variation shall not affect the interest rate borne by any other Global Bank
Notes previously issued hereunder.
(iii) The Bank will from time to time deliver or cause to
be delivered to the Issuing and Paying Agent a supply of blank Global Bank
Notes in such quantities as the Bank shall determine, bearing consecutive
control numbers. Each Global Bank Note will have been executed by the manual
or facsimile signature of an Authorized Representative (as defined in Section
3 hereof) of the Bank. The Issuing and Paying Agent will acknowledge receipt
of the Global Bank Notes delivered to it and will hold such blank Global Bank
Notes in safekeeping in accordance with its customary practice and shall
complete, authenticate and
2
<PAGE> 3
deliver such Global Bank Notes in accordance with the provisions hereof.
Section 3. Authorized Representatives. From time to time, the Bank
will furnish the Issuing and Paying Agent with a certificate executed by an
officer of the Bank certifying the incumbency and specimen signatures of those
officers of the Bank authorized to execute Global Bank Notes on behalf of the
Bank by manual or facsimile signature and to give instructions and notices on
behalf of the Bank hereunder (the "Authorized Representatives"). Until the
Issuing and Paying Agent receives a subsequent certificate, the Issuing and
Paying Agent shall be entitled to rely on the last such certificate delivered
to it for the purposes of determining the identities of Authorized
Representatives of the Bank. Any Global Bank Note bearing the manual or
facsimile signatures of persons who are Authorized Representatives of the Bank
on the date such signatures are affixed shall bind the Bank after the
completion, authentication and delivery thereof by the Issuing and Paying
Agent, notwithstanding that such persons shall have ceased to hold office on
the date such Global Bank Note is so completed, authenticated and delivered by
the Issuing and Paying Agent.
Section 4. Issuance Instructions; Completion, Authentication and
Delivery of Global Bank Notes.
(i) All instructions regarding the completion, authentication
and delivery of Global Bank Notes shall be given by an Authorized
Representative of the Bank by telephone (confirmed in writing as soon as
practicable), by facsimile transmission or by other acceptable written means
by such Authorized Representative.
(ii) Upon receipt of the instructions described above, the
Issuing and Paying Agent shall cause to be withdrawn the necessary and
applicable Global Bank Notes from safekeeping and, in accordance with such
instructions, shall:
(a) complete each Global Bank Note;
(b) record each Global Bank Note in the applicable Bank Note
Register (as defined in Section 10 hereof);
(c) cause each Global Bank Note to be manually authenticated by any
one of the signatories of the Issuing and Paying Agent duly
authorized and designated by it for such purpose; and
(d) with respect to the Global Bank Notes, hold each Global Bank
Note in safekeeping on behalf of the registered holder thereof;
3
<PAGE> 4
provided that instructions regarding the completion and authentication of a
Global Bank Note, whether delivered by facsimile transmission or by other
written means, are received by the Issuing and Paying Agent by 11:00 A.M., New
York City time, on the Business Day immediately preceding the date of
settlement relating to such Global Bank Note (or 9:00 A.M., New York City
time, on the date of settlement relating to such Bank Note if the trade date
and the date of settlement relating to such Bank Note are the same day). As
used in this Agreement, the term "Business Day" shall mean any day that is not
a Saturday or Sunday and that is not a day on which banking institutions in
The City of New York or the city in which the Bank is headquartered are
authorized or required by law, regulation or executive order to close, and
with respect to LIBOR Notes (as defined in the applicable Floating Rate Global
Bank Note) only, any day that is also a London Business Day. As used in this
Agreement, "London Business Day" means any day on which dealings in deposits
in U.S. dollars are transacted in the London interbank market.
Section 5. Reliance on Instructions; Request for Instructions. The
Issuing and Paying Agent shall incur no liability to the Bank in acting
hereunder upon instructions contemplated hereby which the Issuing and Paying
Agent reasonably believed in good faith to have been given by an Authorized
Representative of the Bank. In the event a discrepancy exists between the
instructions as originally received by the Issuing and Paying Agent and any
subsequent written confirmation thereof, such original instructions will be
deemed controlling; provided that the Issuing and Paying Agent gives notice to
the Bank of such discrepancy promptly upon the receipt of such written
confirmation.
Any application by the Issuing and Paying Agent for written
instructions from the Bank may, at the option of the Issuing and Paying Agent,
set forth in writing any action proposed to be taken or omitted by the Issuing
and Paying Agent under this Agreement and the date on and/or after which such
action shall be taken or such omission shall be effective. The Issuing and
Paying Agent shall not be liable for any action taken by, or omission of, the
Issuing and Paying Agent in accordance with a proposal included in such
application on or after the date specified in such application (which date
shall not be less than three Business Days after the Bank has confirmed its
receipt to the Issuing and Paying Agent of such application, unless any such
officer shall have consented in writing to any earlier date) unless prior to
taking any such action (or the effective date in the case of an omission), the
Issuing and Paying Agent shall have received written instructions in response
to such application specifying the action to be taken or omitted.
Section 6. The Bank's Representations and Warranties. Each
instruction given to the Issuing and Paying Agent in
4
<PAGE> 5
accordance with Section 4 hereof shall constitute a representation and
warranty to the Issuing and Paying Agent by the Bank that the issuance and
delivery of the Global Bank Notes have been duly and validly authorized by the
Bank and that the Global Bank Notes, when completed and authenticated pursuant
hereto, will constitute the valid and legally binding obligations of the Bank
subject to applicable bankruptcy, liquidation, insolvency, reorganization,
moratorium and similar laws of general applicability relating to, or
affecting, creditors' rights and to general equity principles. The Bank
further warrants that it is free to enter into this Agreement and to perform
the terms hereof.
Section 7. Payments of Interest; Interest Payment Dates; Record
Dates. Interest payments on Global Bank Notes with maturities of more than
one year will be made: (i) in the case of the Fixed Rate Global Senior Bank
Notes and Fixed Rate Global Subordinated Bank Notes (collectively, the "Fixed
Rate Global Bank Notes"), semi-annually on May 15 and November 15 of each year
(unless otherwise specified in any applicable Fixed Rate Global Bank Notes)
and (ii) in the case of Floating Rate Global Senior Bank Notes and Floating
Rate Global Subordinated Bank Notes (collectively, the "Floating Rate Global
Bank Notes"), on such dates as are specified therein (collectively, the
"Interest Payment Dates") and, in each case, at maturity or upon earlier
redemption or repayment if so indicated in the applicable Global Bank Note.
All such interest payments (other than interest due at maturity or upon
earlier redemption or repayment) will be made to the Holders (as defined in
Section 10 hereof) in whose names Fixed Rate Global Bank Notes are registered
at the close of business on May 1 or November 1 (unless otherwise specified in
any applicable Fixed Rate Global Bank Notes) (whether or not a Business Day)
next preceding such Interest Payment Dates and in whose names Floating Rate
Global Bank Notes are registered at the close of business on the fifteenth
calendar day (whether or not a Business Day) prior to each such Interest
Payment Date (each such May 1, November 1 and fifteenth calendar day, a
"Record Date"). Notwithstanding the foregoing, if the Original Issue Date of
any Global Bank Note with a maturity of more than one year occurs between a
Record Date and the next succeeding Interest Payment Date, the first payment
of interest on any such Global Bank Note will be made on the second Interest
Payment Date succeeding the Original Issue Date (as defined in the Global Bank
Notes). Interest payments will be calculated and made in the manner provided
in the applicable Global Bank Note.
If the Bank does not deposit adequate funds pursuant to Section 9
hereof with respect to the interest due on a Global Bank Note with a maturity
of more than one year on an Interest Payment Date, such interest will cease to
be due to the Holder of such Global Bank Note as of the close of business on
the Record Date relating to such Interest Payment Date and will be paid to
5
<PAGE> 6
the Holder of such Global Bank Note as of the close of business on a special
record date to be fixed by the Issuing and Paying Agent when funds for the
payment of such interest have been deposited pursuant to Section 9 hereof.
Notice of such special record date shall be given by the Issuing and Paying
Agent, at the Bank's expense, to the registered Holder of such Global Bank
Note not less than 10 calendar days prior to such special record date.
Interest payments on Fixed Rate Global Bank Notes with maturities of
one year or less will be made only upon maturity upon presentation and
surrender of the applicable Fixed Rate Global Bank Note (unless otherwise
specified in the applicable Fixed Rate Global Bank Note). Interest payments
on Fixed Rate Global Bank Notes with maturities of one year or less will be
calculated in the manner provided in the applicable Fixed Rate Global Bank
Note. Interest payments on Floating Rate Global Bank Notes with maturities of
one year or less will be made on the Interest Payment Dates specified in such
Floating Rate Global Bank Note and, in each case, at maturity or upon earlier
redemption or repayment. Interest payments on Floating Rate Global Bank Notes
with maturities of one year or less will be calculated in the manner provided
in the applicable Floating Rate Global Bank Note.
Section 8. Payment of Principal. The Issuing and Paying Agent will
pay the Holder of each Global Bank Note the principal amount of each such
Global Bank Note, together with accrued interest and premium, if any, at
maturity (or upon earlier redemption or repayment, if applicable).
Section 9. Deposit of Funds. The total amount of any principal of,
premium, if any, and interest due on Global Bank Notes, on any Interest
Payment Date or any maturity date or date of redemption or repayment shall be
paid by the Bank to the Issuing and Paying Agent no later than 1:00 P.M., New
York City time, in funds available for use by the Issuing and Paying Agent on
such date. The Bank will make such payment on such Global Bank Notes via
Fedwire to an account specified by the Issuing and Paying Agent. Upon receipt
of funds from the Bank with respect to any Global Bank Note, on such date or
as soon as possible thereafter, the Issuing and Paying Agent will pay by
separate wire transfer (using message entry instructions in a form previously
specified by DTC) to an account previously specified by DTC, in funds
available for immediate use by DTC, each payment of principal of, premium, if
any, and interest due on a Global Bank Note on such date.
The Issuing and Paying Agent shall hold such amounts paid to it by
the Bank in trust for the Holders but shall, pending payment by it to the
account specified above, not be under any liability for interest on monies at
any time received
6
<PAGE> 7
by it pursuant to any of the terms of this Agreement or of the Global Bank
Notes, nor shall the Issuing and Paying Agent be required to invest such
monies.
Section 10. Bank Note Register; Registration, Transfer, Exchange;
Persons Deemed Owners.
(i) The Issuing and Paying Agent shall maintain at its offices
the Senior Note Register and Subordinated Note Register (together, the "Bank
Note Registers"). The Issuing and Paying Agent is hereby appointed as
Registrar for the purpose of registering each Global Bank Note and transfers
of such Global Bank Note as herein provided. The terms "Senior Note Register"
and "Subordinated Note Register" shall mean the definitive records in which
shall be recorded the names, addresses and taxpayer identifying numbers of the
holders of the Global Senior Bank Notes and Global Subordinated Bank Notes,
respectively (collectively, the "Holders"), the serial and CUSIP numbers of
each such Global Bank Note and the Original Issue Date thereof and details
with respect to the transfer and exchange of each Global Bank Note.
(ii) Upon surrender for registration of transfer of any Global
Bank Note at the offices of the Issuing and Paying Agent, the Bank shall
execute, and the Issuing and Paying Agent shall complete, authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Global Bank Notes of any authorized denominations and having identical
terms and provisions and for an equal aggregate principal amount.
(iii) At the option of the Holder of a Global Bank Note,
such Global Bank Note may be exchanged for other Global Bank Notes of any
authorized denominations of an equal aggregate principal amount and having
identical terms and provisions, upon surrender of the Global Bank Notes to be
exchanged at the designated offices of the Issuing and Paying Agent. Whenever
any Global Bank Notes are so surrendered for exchange, the Bank shall execute,
and the Issuing and Paying Agent shall complete, authenticate and deliver, the
Global Bank Notes which the Holder of the Global Bank Note making the exchange
is entitled to receive. Except as provided below, owners of beneficial
interests in a Global Bank Note representing Book-Entry Bank Notes will not be
entitled to have such Book-Entry Bank Notes registered in their names, will
not receive or be entitled to receive physical delivery of Bank Notes in
certificated form and will not be considered the owners or holders thereof
under this Agreement. However, if DTC notifies the Bank that it is unwilling
or unable to continue as depositary or if at any time DTC ceases to be a
clearing agency registered under the Securities Exchange Act of 1934, as
amended, and a successor depositary is not appointed by the Bank within 60
days, or the Bank in its sole discretion determines not to have
7
<PAGE> 8
Book-Entry Bank Notes represented by one or more Global Bank Notes, then
Global Bank Notes representing Book-Entry Bank Notes may be exchanged in whole
for definitive Bank Notes in registered form, of like tenor and of an equal
aggregate principal amount, in minimum denominations of $250,000 and integral
multiples of $1,000 in excess thereof, upon surrender of the Global Bank Notes
to be exchanged at the offices of the Issuing and Paying Agent.
(iv) Notwithstanding the foregoing, the Issuing and Paying
Agent shall not register the transfer of or exchange (i) any Global Bank Note
that has been called for redemption in whole or in part, except the unredeemed
portion of Global Bank Notes being redeemed in part, (ii) any Global Bank Note
during the period beginning at the opening of business 15 days before the
mailing of a notice of such redemption and ending at the close of business on
the day of such mailing, or (iii) any Global Bank Note in violation of the
legend contained on the face of such Global Bank Note.
(v) All Global Bank Notes issued upon any registration of
transfer or exchange of Global Bank Notes shall be the valid obligations of
the Bank, evidencing the same debt, and entitled to the same benefits as the
Global Bank Notes surrendered upon such registration of transfer or exchange.
(vi) Every Global Bank Note presented or surrendered for
registration of transfer or for exchange shall be duly endorsed, or be
accompanied by a written instrument of transfer with such evidence of due
authorization and guaranty of signature as may reasonably be required by the
Issuing and Paying Agent, in form satisfactory to the Issuing and Paying
Agent, duly executed by the Holder thereof or his attorney duly authorized in
writing.
(vii) No service charge shall be made to a holder of Global
Bank Notes for any transfer or exchange of Global Bank Notes, but the Bank may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.
(viii) The Bank and the Issuing and Paying Agent, and any
agent of the Bank or the Issuing and Paying Agent may treat the Holder in
whose name a Global Bank Note is registered as the owner of such Global Bank
Note for all purposes, whether or not such Global Bank Note be overdue, and
neither the Bank, the Issuing and Paying Agent nor any such agent shall be
affected by notice to the contrary except as required by applicable law.
Section 11. Mutilated, Destroyed, Lost, or Stolen Global Bank
Notes. In case any Global Bank Note shall at any time become mutilated,
destroyed, lost or stolen, and such Global
8
<PAGE> 9
Bank Note or evidence of the loss, theft or destruction thereof satisfactory
to the Bank and the Issuing and Paying Agent (together with indemnity
hereinafter referred to and such other documents or proof as may be required
by the Bank and the Issuing and Paying Agent) shall be delivered to the
Issuing and Paying Agent, the Bank shall execute a new Global Bank Note, of
like tenor and principal amount, having a serial number not contemporaneously
outstanding, in exchange and substitution for the mutilated Global Bank Note
or in lieu of the Global Bank Note destroyed, lost or stolen but, in the case
of any destroyed, lost or stolen Global Bank Note, only upon receipt of
evidence satisfactory to the Issuing and Paying Agent and the Bank that such
Global Bank Note was destroyed, stolen or lost, and, if required, upon receipt
of indemnity satisfactory to each of them. The Issuing and Paying Agent shall
authenticate any such substituted Global Bank Note and deliver the same upon
the written request or authorization of any Authorized Representative of the
Bank. Upon the issuance of any substituted Global Bank Note, the Bank and the
Issuing and Paying Agent may require the payment of a sum sufficient to cover
all expenses and reasonable charges connected with the preparation,
authentication and delivery of a new Global Bank Note. If any Global Bank
Note which has matured or has been redeemed or repaid or is about to mature or
to be redeemed or repaid, as the case may be, shall become mutilated,
destroyed, lost or stolen, the Bank may, instead of issuing a substitute
Global Bank Note, pay or authorize the payment of the same (without surrender
thereof except in the case of a mutilated Global Bank Note) upon compliance by
the Holder with the provisions of this Section.
Section 12. Cancellation. All Global Bank Notes surrendered for
payment, registration of transfer or exchange shall, if surrendered to any
person other than the Issuing and Paying Agent, be delivered to the Issuing
and Paying Agent and shall be promptly cancelled by it. The Bank may at any
time deliver to the Issuing and Paying Agent for cancellation any Global Bank
Notes previously authenticated and delivered hereunder which the Bank may have
acquired in any manner whatsoever, and all Global Bank Notes so delivered
shall be promptly cancelled by the Issuing and Paying Agent. No Global Bank
Note shall be authenticated in lieu of or in exchange for any Global Bank Note
cancelled as provided in this Section, except as expressly permitted by this
Agreement. All cancelled Global Bank Notes held by the Issuing and Paying
Agent shall be returned to the Bank.
Upon the written request of the Bank, the Issuing and Paying Agent
shall promptly cancel and return to the Bank all unissued Global Bank Notes in
its possession.
9
<PAGE> 10
Section 13. Redemption of Global Bank Notes.
(i) If any Global Bank Notes are to be redeemed prior to
maturity, the Bank shall notify the Issuing and Paying Agent not more than 60
nor less than 45 calendar days prior to the date fixed by the Bank for such
redemption (the "Redemption Date") of the Bank's election to redeem such
Global Bank Notes in whole or in part in increments of $1,000 (provided that
any remaining principal amount of such Global Bank Notes shall be at least
$250,000).
(ii) Whenever less than all the Global Bank Notes at any time
outstanding are to be redeemed, the terms of the Global Bank Notes to be so
redeemed shall be selected by the Bank. If less than all the Global Bank
Notes with identical terms at any time outstanding are to be redeemed, the
Global Bank Notes to be so redeemed shall be selected by the Issuing and
Paying Agent by lot or in any usual manner approved by it. The Issuing and
Paying Agent shall promptly notify the Bank in writing of the Global Bank
Notes selected for redemption and, in the case of Global Bank Notes selected
for partial redemption, the principal amount thereof to be redeemed.
(iii) Unless otherwise specified in the applicable Global
Bank Note, notice of redemption shall be given by the Issuing and Paying
Agent, at the Bank's expense, by first-class mail, postage prepaid, mailed not
more than 60 nor less than 30 calendar days prior to the Redemption Date, to
each Holder of such Global Bank Note to be redeemed, at its address appearing
in the Bank Note Register. All notices of redemption shall identify the
Global Bank Notes to be redeemed (including CUSIP number) and shall state:
(i) the Redemption Date; (ii) the redemption price, which shall be determined
in accordance with the terms of the Global Bank Note (the "Redemption Price");
(iii) if less than all of the Global Bank Notes at any time outstanding are to
be redeemed, the identification (and, in the case of partial redemption, the
principal amounts) of the particular Global Bank Notes to be redeemed;
(iv) that on the Redemption Date the Redemption Price plus accrued interest,
if any, to the Redemption Date will become due and payable with respect to
each Global Bank Note to be redeemed and that interest thereon will cease to
accrue on and after said date; and (v) the place or places where such Global
Bank Notes are to be surrendered for payment.
(iv) Notice of redemption having been given as described above,
the Global Bank Notes so to be redeemed shall, on the Redemption Date, become
due and payable at the Redemption Price, and from and after such date such
Global Bank Notes shall cease to bear interest. The Bank shall deposit funds
with the Issuing and Paying Agent prior to the Redemption Date which are
sufficient to redeem such Global Bank Notes which are scheduled
10
<PAGE> 11
to be so redeemed. Upon surrender of any such Global Bank Notes for
redemption in accordance with such notice, the Issuing and Paying Agent shall
pay such Global Bank Notes at the Redemption Price, together with unpaid
interest accrued on such Global Bank Notes at the applicable rate borne by
such Global Bank Notes to the Redemption Date.
(v) Any Global Bank Note which is to be redeemed only in part
shall be surrendered to the Issuing and Paying Agent, and the Issuing and
Paying Agent shall complete, authenticate and deliver to the Holder of such
Global Bank Note, without service charge, a new Global Bank Note or Global
Bank Notes, of any authorized denomination as requested by such Holder (which
shall be $250,000 or an integral multiple of $1,000 in excess thereof), in an
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Global Bank Note so surrendered.
(vi) The Bank, in issuing the Global Bank Notes, may use
"CUSIP" numbers and, if so, the Issuing and Paying Agent shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders; provided,
however, that any such notice may state that no representation is made as to
the correctness of such numbers either as printed on the Global Bank Notes or
as contained in any notice of a redemption and that reliance may be placed
only on the other identification numbers printed on the Global Bank Notes, and
any such redemption shall not be affected by any defect in or omission of such
numbers.
Section 14. Repayment of Global Bank Notes.
(i) In order for any Global Bank Note to be repaid in whole or
in part at the option of the Holder thereof, such Global Bank Note must be
delivered by the Holder thereof, with the form entitled "Option to Elect
Repayment" (set forth in such Global Bank Note) duly completed, to the Issuing
and Paying Agent at its offices located at the address set forth in Section 20
hereof, or such other place or places of which the Bank shall from time to
time notify the Holders of the Global Bank Notes, not more than 60 nor less
than 30 calendar days prior to any date fixed for such repayment of such
Global Bank Notes (the "Optional Repayment Date").
(ii) Upon surrender of any Global Bank Note for repayment in
accordance with the provisions set forth above, the Global Bank Note to be
repaid shall, on the Optional Repayment Date, become due and payable, and the
Issuing and Paying Agent shall pay such Global Bank Note on the Optional
Repayment Date at a price equal to 100% of the principal amount thereof,
together with accrued interest to the Optional Repayment Date.
11
<PAGE> 12
(iii) If less than the entire principal amount of any
Global Bank Note is to be repaid, the Holder thereof shall specify the portion
thereof (which shall be in increments of $1,000) which such Holder elects to
have repaid and shall surrender such Global Bank Note to the Issuing and
Paying Agent, and the Issuing and Paying Agent shall complete, authenticate
and deliver to the Holder of such Global Bank Note, without service charge, a
new Global Bank Note or Global Bank Notes in an aggregate principal amount
equal to and in exchange for the unrepaid portion of the principal of the
Global Bank Note so surrendered and in such denominations as shall be
specified by such Holder (which shall be $250,000 or an integral multiple of
$1,000 in excess thereof).
Section 15. Acceleration of Maturity. If an Event of Default (as
defined in the applicable Global Bank Note) with respect to a Senior Bank Note
or Subordinated Bank Note, as the case may be, issued by the Bank shall occur,
then the Holder of the applicable Senior Bank Note or Subordinated Bank Note
may declare the principal amount of, and accrued interest and premium, if any,
on such Senior Bank Note or Subordinated Bank Note due and payable by written
notice to the Bank. Upon such declaration and notice, such principal amount,
accrued interest and premium, if any, shall become immediately due and
payable. The Bank shall promptly notify, and provide copies of any such
notice to, the Issuing and Paying Agent, and the Issuing and Paying Agent
shall promptly mail by first-class mail, postage prepaid, copies of such
notice to the Holders of the Senior Bank Notes or the Subordinated Bank Notes,
as the case may be, upon the occurrence of an Event of Default or of the
curing or waiver of an Event of Default. Any Event of Default with respect to
a Bank Note may be waived by the Holder thereof.
Notwithstanding the foregoing, the acceleration of any Bank Note issued
prior to the date of this Agreement pursuant to the terms of the Issuing and
Paying Agency Agreement dated as of December 7, 1994 which is amended and
restated by this Agreement, shall be governed by the terms of such Agreement
and of such Bank Notes. Holders of the Bank Notes issued on or after the date
of such Agreement shall be disregarded for purposes of computing the
percentage of Holders which may declare the principal amount of, and accrued
interest and premium, if any, on such Bank Notes issued prior to the date of
this Agreement due and payable.
Section 16. Application of Funds; Return of Unclaimed Funds. Any
monies paid by the Bank and held by the Issuing and Paying Agent in trust for
payment of principal of, premium, if any, or interest on, any Global Bank
Notes that remain unclaimed for two years following the date on which such
principal, premium or interest shall have become due and payable shall be
returned to the Bank by the Issuing and Paying Agent and the Issuing and
Paying Agent shall inform the Bank as to the specific Global Bank
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<PAGE> 13
Notes to which such monies related, and any Holder shall thereafter look, as
an unsecured general creditor, only to the Bank for the payment thereof and
all liability of the Issuing and Paying Agent with respect to such trust
monies shall thereupon cease. Any funds deposited by the Bank with the
Issuing and Paying Agent for the payment of principal of, premium, if any, or
interest on, any Bank Note shall be held in trust on behalf of the Bank by the
Issuing and Paying Agent for the payment of principal of, premium, if any, or
interest on, any Bank Note until paid or returned to the Bank.
Section 17. Cancellation of Unissued Notes. Upon the written
request of the Bank, the Issuing and Paying Agent promptly shall cancel and
return to the Bank all unissued Bank Notes in its possession.
Section 18. Liability. Neither the Issuing and Paying Agent nor
its directors, officers, employees or agents shall be liable to the Bank for
any act or omission hereunder except in the case of gross negligence or
willful misconduct. The duties and obligations of the Issuing and Paying
Agent, its directors, officers and employees shall be determined by the
express provisions of this Agreement and no implied covenants shall be read
into this Agreement against any of them. Notwithstanding any other provision
elsewhere contained in this Agreement, the Issuing and Paying Agent is acting
solely as agent of the Bank and does not assume any obligation or relationship
of trust or agency for or with any Holders. Neither the Issuing and Paying
Agent nor any of its directors, officers or employees shall be required to
ascertain whether any issuance or sale of Bank Notes (or any amendment or
termination of this Agreement) has been duly authorized (provided that the
Issuing and Paying Agent in good faith has determined that the facsimile or
manual signature of the Authorized Representative or any person who has been
designated by the Authorized Representative in writing to the Issuing and
Paying Agent reasonably resembles the specimen signatures filed with the
Issuing and Paying Agent) or is in compliance with any other agreement to
which the Bank is a party (whether or not the Issuing and Paying Agent is also
a party to such other agreement), and the Issuing and Paying Agent and each of
its officers and employees shall be entitled to rely upon any instructions
reasonably believed (in accordance with Section 3 hereof) by the Issuing and
Paying Agent and its officers and employees to be given on behalf of the Bank
by an Authorized Representative or by any person who has been designated by an
Authorized Representative in writing to the Issuing and Paying Agent as a
person authorized to give such instructions hereunder, whether or not in fact
given by the Authorized Representative or such designated person. In no event
shall the Issuing and Paying Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Issuing and Paying Agent has been advised
13
<PAGE> 14
of the likelihood of such loss or damage and regardless of the form of action.
The Issuing and Paying Agent may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Issuing and Paying Agent shall not be responsible
for any willful misconduct or gross negligence on the part of any agent or
attorney appointed with due care by it hereunder. The Issuing and Paying
Agent may consult with counsel of its selection and the advice of such counsel
or any opinion of counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon. The Issuing and Paying Agent shall not
be liable for any action taken, suffered, or omitted to be taken by it in good
faith and reasonably believed by it to be authorized or within the discretion
or rights or powers conferred upon it by this Agreement.
Section 19. Indemnification, Risk of Funds. The Bank shall
indemnify and hold harmless the Issuing and Paying Agent, its directors,
officers, employees and agents from and against all actions, claims, losses,
damages, liabilities, losses and expenses (including reasonable legal fees and
expenses) relating to or arising out of their actions or inactions taken or
omitted to be taken by the Issuing and Paying Agent in good faith in
connection with its performance under this Agreement including, but not
limited to, any actions taken or omitted upon instructions by the Bank (in
accordance with Section 3) or the issuance, delivery, payment or non-payment
of any Bank Note or interest thereon, or other receipt or other funds for the
payment of the Bank Notes or interest or premium thereon; provided, however,
that the Issuing and Paying Agent shall be liable for any liabilities, losses,
claims, damages, costs and expenses (including reasonable legal fees and
expenses) caused by the negligence, bad faith or willful misconduct of its
directors, officers, employees or agents. This indemnity shall survive the
termination of this Agreement.
No provision of this Agreement shall require the Issuing and Paying
Agent to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
Section 20. Compensation of the Issuing and Paying Agent. The Bank
agrees to pay the compensation of the Issuing and Paying Agent, at such rates
as shall be mutually agreed upon in writing between the Bank and the Issuing
and Paying Agent from time to time. The Bank shall reimburse upon demand the
Issuing
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<PAGE> 15
and Paying Agent for all reasonable out-of-pocket expenses (including
reasonable legal fees and expenses), disbursements and advances incurred or
made by the Issuing and Paying Agent with respect to the Bank in accordance
with any provisions of this Agreement, except any such expense, disbursement
or advance proven to be attributable to the breach of this Agreement or the
gross negligence, bad faith or willful misconduct of the Issuing and Paying
Agent, upon receipt of such invoices as the Bank may reasonably require. The
provisions of this Section 20 shall survive the termination of this Agreement.
Section 21. Notices.
(i) All communications by or on behalf of the Bank relating to
the issuance, transfer, exchange or payment of Bank Notes or interest thereon
shall be directed to the offices of the Issuing and Paying Agent located at
450 West 33rd Street, New York, New York 10001, Attention: Global Trust
Securities Group, or to such other offices as the Issuing and Paying Agent
shall specify in writing to the Bank. The Bank will send all Global Bank
Notes to be completed and delivered by the Issuing and Paying Agent to such
offices or such other offices as the Issuing and Paying Agent shall specify in
writing to the Bank.
(ii) All other notices and communications hereunder shall be in
writing and shall be addressed as follows:
(a) if to the Bank:
Capital One Bank
2980 Fairview Park Drive
Falls Church, Virginia 22042
Attention: Treasurer
Telecopy: [ ]
(b) if to the Issuing and Paying Agent:
Chemical Bank
450 West 33rd Street
New York, New York 10001
Attention: Global Trust Securities Group
Telecopy: (212) 946-3498
Section 22. Resignation or Removal of Issuing and Paying Agent and
Appointment of Successor Issuing and Paying Agent; Merger, Conversion and
Consolidation. The Bank agrees, for the benefit of the Holders from time to
time of the Bank Notes, that there shall at all times be an Issuing and Paying
Agent hereunder which shall be a bank or trust company organized and doing
business under the laws of the United States or any
15
<PAGE> 16
state thereof authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $10,000,000 and subject to
supervision and examination by federal or state authority, until all the
Global Bank Notes authenticated and delivered hereunder (A) shall have been
delivered to the Issuing and Paying Agent for cancellation or (B) shall have
become due and payable and funds sufficient to pay the principal of, premium,
if any, and interest on, the Global Bank Notes shall have been made available
for payment and either paid or returned to the Bank, whichever event occurs
earlier. The foregoing capital and surplus requirements shall not be
applicable if any of the Bank or an affiliate of the Bank is appointed as
successor Issuing and Paying Agent.
The Issuing and Paying Agent may resign at any time as such agent
upon written notice to the Bank of such intention on its part, specifying the
date on which its desired resignation shall become effective; provided,
however, that such date shall be not less than 90 calendar days after the
giving of such notice by the Issuing and Paying Agent to the Bank. The
Issuing and Paying Agent may be removed at any time as such agent by the
filing with it of an instrument in writing signed by a duly authorized officer
of the Bank and specifying such removal and the date, which shall be at least
30 calendar days following receipt of such written notice, upon which it is
intended to become effective. Any such resignation or removal shall take
effect on the date of the appointment by the Bank of a successor issuing and
paying agent and the acceptance of such appointment by such successor issuing
and paying agent that qualifies as such under the first paragraph of this
Section. In the event of the resignation or removal of the Issuing and Paying
Agent, if a successor issuing and paying agent has not been appointed by the
Bank within 90 calendar days after the giving of notice of resignation or
within 30 calendar days after receipt of notice of removal, the Issuing and
Paying Agent may, at the expense of the Bank, petition any court of competent
jurisdiction for appointment of a successor Issuing and Paying Agent. Upon
any such resignation or removal, the Issuing and Paying Agent shall transfer
to the successor Issuing and Paying Agent (or, if none shall have been
appointed, to the Bank) all monies held by the Issuing and Paying Agent on
behalf of the Bank in respect of any Global Bank Notes, any unissued Global
Bank Notes and all books and records or copies thereof related to Global Bank
Notes maintained by the Issuing and Paying Agent, including copies of the Bank
Note Registers. Any resignation or removal hereunder shall not affect the
Issuing and Paying Agent's rights to the payment of fees earned or charges
incurred through the effective date of such resignation or removal.
Any corporation or bank into which the Issuing and Paying Agent
hereunder may be merged or converted, or any corporation or bank with which
the Issuing and Paying Agent may
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<PAGE> 17
be consolidated, or any corporation or bank resulting from any merger,
conversion or consolidation to which the Issuing and Paying Agent shall be a
party, or any corporation or bank to which the Issuing and Paying Agent shall
sell or otherwise transfer all or substantially all of the assets and business
of the Issuing and Paying Agent, provided that it shall be qualified under the
first paragraph of this Section, shall be the successor Issuing and Paying
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
Section 23. Benefit of Agreement. This Agreement is solely for the
benefit of the parties hereto, Holders of Bank Notes, and their successors and
assigns, and nothing herein, express or implied, shall give to any other
persons any benefits or any legal or equitable right, remedy or claim under or
by virtue of this Agreement. No party hereto may assign any of its rights or
obligations hereunder except with the prior written consent of all the parties
hereto.
Section 24. Bank Notes Held by the Issuing and Paying Agent. The
Issuing and Paying Agent, in its individual or other capacity, may become the
owner or pledgee of the Bank Notes with the same rights it would have if it
were not acting as an issuing and paying agent hereunder.
Section 25. Amendment. This Agreement shall not be amended by any
party hereto except in writing executed by the duly authorized officers of all
parties.
Section 26. Governing Law. This Agreement shall be governed by,
construed and enforced in accordance with, the laws of the State of New York
applicable to agreements made and to be performed in such State, without
regard to conflicts of laws principles.
Section 27. Counterparts. This Agreement may be executed by the
parties hereto in any number of counterparts, and by each of the parties
hereto in separate counterparts, and each such counterpart, when so executed
and delivered, shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
17
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on their behalf by their officers thereunto duly authorized, all
as of the day and year first above written.
CAPITAL ONE BANK
By: /s/
------------------------------
Name:
Title:
CHEMICAL BANK,
as Issuing and Paying Agent
By: /s/ Vernon Wiltshire
-------------------------------
Name: Vernon Wiltshire
Title: Assistant Vice President
18
<PAGE> 19
A-1
THIS SENIOR NOTE IS AN OBLIGATION SOLELY OF THE BANK AND WILL NOT BE AN
OBLIGATION OF, OR OTHERWISE GUARANTEED BY, ANY OTHER BANK OR CAPITAL ONE
FINANCIAL CORPORATION. THIS SENIOR NOTE DOES NOT EVIDENCE DEPOSITS OF THE
BANK AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENT AGENCY. THE OBLIGATIONS EVIDENCED BY THIS SENIOR NOTE RANK
PARI PASSU WITH ALL OTHER SENIOR UNSECURED INDEBTEDNESS OF THE BANK, EXCEPT
DEPOSIT LIABILITIES (AS PROVIDED IN SECTION 11(D)(11) OF THE FEDERAL DEPOSIT
INSURANCE ACT) AND OTHER OBLIGATIONS THAT ARE SUBJECT TO ANY PRIORITIES OR
PREFERENCES. IN A LIQUIDATION OR OTHER RESOLUTION OF THE BANK, THIS SENIOR
NOTE WOULD BE TREATED DIFFERENTLY FROM, AND HOLDERS OF THIS SENIOR NOTE COULD
RECEIVE, IF ANYTHING, SIGNIFICANTLY LESS THAN HOLDERS OF, DEPOSIT LIABILITIES
OF THE BANK.
UNLESS THIS SENIOR NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE
"DEPOSITARY") TO THE BANK OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY SENIOR NOTE ISSUED UPON REGISTRATION OF TRANSFER OF, OR IN
EXCHANGE FOR, OR IN LIEU OF, THIS SENIOR NOTE IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH
NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
THIS SENIOR NOTE IS ISSUABLE ONLY IN FULLY REGISTERED FORM IN MINIMUM
DENOMINATIONS OF $250,000 AND INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF.
EACH OWNER OF A BENEFICIAL INTEREST IN THIS SENIOR NOTE MUST BE AN
INSTITUTIONAL INVESTOR WHO IS AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF
RULE 501 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND IS REQUIRED TO HOLD
A BENEFICIAL INTEREST IN $250,000 PRINCIPAL AMOUNT OR ANY INTEGRAL MULTIPLE OF
$1,000 IN EXCESS THEREOF OF THIS SENIOR NOTE AT ALL TIMES.
No. FXR-________
CUSIP NO.: _______ REGISTERED
CAPITAL ONE BANK
GLOBAL SENIOR BANK NOTE
(Fixed Rate)
<PAGE> 20
ORIGINAL ISSUE DATE: PRINCIPAL AMOUNT:
INTEREST RATE: _______% MATURITY DATE:
INTEREST PAYMENT DATE(S): REGULAR RECORD DATES (FOR
[ ] At Maturity only NOTES WITH MATURITIES OF
[ ] May 15 and November 15 MORE THAN ONE YEAR)
[ ] Other: (if other than May 1
or November 1, prior to each
INITIAL REDEMPTION Interest Payment Date):
DATE:
INITIAL REDEMPTION
PERCENTAGE:
ANNUAL REDEMPTION HOLDER'S OPTIONAL
PERCENTAGE REDUCTION: REPAYMENT DATE(S):
DAY COUNT CONVENTION
[ ] 30/360 FOR THE PERIOD FROM TO .
[ ] ACTUAL/360 FOR THE PERIOD FROM TO .
[ ] ACTUAL/ACTUAL FOR THE PERIOD FROM TO .
ADDENDUM ATTACHED: ORIGINAL ISSUE DISCOUNT:
[ ] Yes [ ] Yes
[ ] No [ ] No
Total Amount of OID:
DEFAULT RATE: _______% Yield to Maturity:
Initial Accrual Period:
OTHER PROVISIONS:
2
<PAGE> 21
Capital One Bank, a bank duly authorized and existing under the laws of
the Commonwealth of Virginia (the "Bank"), for value received, hereby promises
to pay to CEDE & CO., or registered assigns, the principal sum of ____________
_____________________________________________________________ United States
Dollars on the Maturity Date specified above (except to the extent redeemed or
repaid prior to the Maturity Date) and to pay interest thereon from and
including the Original Issue Date specified above or from and including the
most recent interest payment date on which interest on this Senior Note (or
any predecessor Senior Note) has been paid or duly provided for, semi-annually
on May 15 and November 15 of each year (unless otherwise specified on the
face hereof) (each, an "Interest Payment Date") and at maturity or upon
earlier redemption or repayment, if applicable, commencing on the first
Interest Payment Date next succeeding the Original Issue Date (or, if the
Original Issue Date is between a Regular Record Date (as defined below) and
the Interest Payment Date immediately following such Regular Record Date, on
the second Interest Payment Date following the Original Issue Date), at the
Interest Rate per annum specified above, until the principal hereof is paid or
made available for payment, and (to the extent that the payment of such
interest shall be legally enforceable) at the Default Rate per annum specified
above on any overdue principal and premium, if any, and on any overdue
installment of interest. If no Default Rate is specified above, the Default
Rate shall be the Interest Rate on this Senior Note specified above. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date will be paid to the person in whose name this Senior Note (or any
predecessor Senior Note) is registered at the close of business on the Regular
Record Date, which shall be May 1 and November 1 (whether or not a Business
Day (as defined below)), as the case may be, next preceding the applicable
Interest Payment Date (unless otherwise specified on the face hereof) (each, a
"Regular Record Date"); provided, however, that interest payable at maturity
or upon earlier redemption or repayment, if applicable, will be payable to the
person to whom principal shall be payable. Any such interest not so
punctually paid or duly provided for shall forthwith cease to be payable to
the holder as of the close of business on such Regular Record Date, and may
either be paid to the person in whose name this Senior Note (or any
predecessor Senior Note) is registered at the close of business on a special
record date for the payment of such defaulted interest (the "Special Record
Date") to be fixed by the Bank, notice of which shall be given to the holders
of Senior Notes not less than 10 calendar days prior
3
<PAGE> 22
to such Special Record Date, or be paid at any time in any other lawful
manner.
Payment of principal of, premium, if any, and interest on, this Senior
Note will be made in such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public and private
debts. The Bank will at all times appoint and maintain an issuing and paying
agent (the "Issuing and Paying Agent," which term shall include any successor
Issuing and Paying Agent), authorized by the Bank to pay principal of,
premium, if any, and interest on, this Senior Note on behalf of the Bank
pursuant to an issuing and paying agency agreement (the "Issuing and Paying
Agency Agreement") and having an office or agency (the "Issuing and Paying
Agent Office") in The City of New York or in the city in which the Bank is
headquartered (the "Place of Payment"), where this Senior Note may be
presented or surrendered for payment and where notices, designations or
requests in respect of payments with respect to this Senior Note may be
served. The Bank has initially appointed Chemical Bank as the Issuing and
Paying Agent, with the Issuing and Paying Agent Office currently located at
450 West 33rd Street, New York, New York 10001, Attention: Global Trust
Securities Group. The Bank may remove the Issuing and Paying Agent pursuant
to the terms of the Issuing and Paying Agency Agreement and may appoint a
successor Issuing and Paying Agent.
Payment of principal of, premium, if any, and interest on, this Senior
Note due at maturity or upon earlier redemption or repayment, if applicable,
will be made in immediately available funds upon presentation and surrender of
this Senior Note to the Issuing and Paying Agent at the Issuing and Paying
Agent Office; provided that this Senior Note is presented to the Issuing and
Paying Agent in time for the Issuing and Paying Agent to make such payment in
accordance with its normal procedures. Payments of interest on this Senior
Note (other than at maturity or upon earlier redemption or repayment) will be
made by wire transfer to such account as has been appropriately designated to
the Issuing and Paying Agent by the person entitled to such payments.
Reference herein to "this Senior Note", "hereof", "herein" and comparable
terms shall include an Addendum hereto if an Addendum is specified above.
Reference is hereby made to the further provisions of this Senior Note
set forth on the reverse hereof, which further
4
<PAGE> 23
provisions shall for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Bank has caused this Senior Note to be duly
executed.
CAPITAL ONE BANK
By:
------------------------------------------------
Authorized Signatory
Dated:
ISSUING AND PAYING AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Senior Notes referred to in the Issuing and Paying Agency
Agreement.
CHEMICAL BANK,
as Issuing and Paying Agent
By:
--------------------------
Authorized Signatory
5
<PAGE> 24
[Reverse]
This Senior Note is one of a duly authorized issue of Senior Bank Notes
of the Bank due from 30 days to 30 years from date of issue (the "Senior
Notes").
Payments of interest hereon will include interest accrued to but
excluding the relevant Interest Payment Date or Maturity Date or date of
earlier redemption or repayment, as the case may be. Unless otherwise
specified on the face hereof, interest on Senior Notes with maturities of
greater than one year will be computed on the basis of a 360-day year of
twelve 30-day months. Unless otherwise specified on the face hereof, interest
on Senior Notes with maturities of one year or less will be computed on the
basis of the actual number of days in the year divided by 360 and will be
payable only at maturity to the person to whom principal shall be payable.
Any provision contained herein with respect to the calculation of the
rate of interest applicable to this Senior Note, its Interest Payment Dates or
any other matter relating hereto may be modified as specified in an Addendum
relating hereto if so specified on the face hereof.
If any Interest Payment Date, Maturity Date or date of earlier redemption
or repayment of this Senior Note falls on a day which is not a Business Day,
the related payment of principal of, premium, if any, or interest on, this
Senior Note shall be made on the next succeeding Business Day with the same
force and effect as if made on the date such payment were due, and no interest
shall accrue on the amount so payable for the period from and after such
Interest Payment Date, Maturity Date or date of earlier redemption or
repayment, as the case may be. "Business Day" means, unless otherwise
specified on the face hereof, any day that is not a Saturday or Sunday and
that in The City of New York or in the city in which the Bank is headquartered
is not a day on which banking institutions are authorized or required by law,
regulation or executive order to close.
This Senior Note will not be subject to any sinking fund. If so provided
on the face of this Senior Note, this Senior Note may be redeemed by the Bank
either in whole or in part on and after the Initial Redemption Date, if any,
specified on the face
6
<PAGE> 25
hereof. If no Initial Redemption Date is specified on the face hereof, this
Senior Note may not be redeemed prior to the Maturity Date. On and after the
Initial Redemption Date, if any, this Senior Note may be redeemed in
increments of $1,000 (provided that any remaining principal amount hereof
shall be at least $250,000) at the option of the Bank at the applicable
Redemption Price (as defined below), together with unpaid interest accrued
hereon at the applicable rate borne by this Senior Note to the date of
redemption (each such date, a "Redemption Date"), on written notice given not
more than 60 nor less than 30 calendar days prior to the Redemption Date to
the registered holder hereof. Whenever less than all the Senior Notes at any
time outstanding are to be redeemed, the terms of the Senior Notes to be so
redeemed shall be selected by the Bank. If less than all the Senior Notes
with identical terms at any time outstanding are to be redeemed, the Senior
Notes to be so redeemed shall be selected by the Issuing and Paying Agent by
lot or in any usual manner approved by it. In the event of redemption of this
Senior Note in part only, a new Senior Note for the unredeemed portion hereof
shall be issued in the name of the holder hereof upon the surrender hereof.
The "Redemption Price" shall initially be the Initial Redemption
Percentage specified on the face hereof of the principal amount of this Senior
Note to be redeemed and shall decline at each anniversary of the Initial
Redemption Date specified on the face hereof by the Annual Redemption
Percentage Reduction, if any, specified on the face hereof, of the principal
amount to be redeemed until the Redemption Price is 100% of such principal
amount.
This Senior Note may be subject to repayment at the option of the holder
hereof in accordance with the terms hereof on any Holder's Optional Repayment
Date(s), if any, specified on the face hereof. If no Holder's Optional
Repayment Date is specified on the face hereof, this Senior Note will not be
repayable at the option of the holder hereof prior to maturity. On any
Holder's Optional Repayment Date, this Senior Note will be repayable in whole
or in part in increments of $1,000 (provided that any remaining principal
amount hereof will be at least $250,000) at the option of the holder hereof at
a repayment price equal to 100% of the principal amount to be repaid, together
with accrued and unpaid interest hereon payable to the date of repayment. For
this Senior Note to be repaid in whole or in part at the option of the holder
hereof on a Holder's Optional Repayment Date, this Senior Note must be
delivered, with the form entitled "Option to Elect Repayment" attached hereto
duly completed, to the Issuing
7
<PAGE> 26
and Paying Agent at its offices located at 450 West 33rd Street, New York, New
York 10001, Attention: Global Trust Securities Group, or at such other address
which the Bank shall from time to time notify the holders of the Senior Notes,
not more than 60 nor less than 30 calendar days prior to such Holder's
Optional Repayment Date. In the event of repayment of this Senior Note in
part only, a new Senior Note for the unrepaid portion hereof shall be issued
in the name of the holder hereof upon the surrender hereof. Exercise of such
repayment option by the holder hereof shall be irrevocable.
If this Senior Note is an Original Issue Discount Note and if an Event of
Default with respect to this Senior Note shall have occurred and be
continuing, the Default Amount (as defined hereafter) of this Senior Note may
be declared due and payable in the manner and with the effect provided herein.
The "Default Amount" shall be equal to the adjusted issue price as of the
first day of the accrual period as determined under Final Treasury Regulation
Section 1.1275-1(b) (or successor regulation) under the United States Internal
Revenue Code of 1986, as amended, in which the date of acceleration occurs
increased by the daily portion of the original issue discount for each day in
such accrual period ending on the date of acceleration, as determined under
Final Treasury Regulation Section 1.1272-1(b) (or successor regulation) under
the United States Internal Revenue Code of 1986, as amended. Upon payment of
(i) the principal, or premium, if any, so declared due and payable and (ii)
interest on any overdue principal and overdue interest or premium, if any (in
each case to the extent that the payment of such interest shall be legally
enforceable), all of the Bank's obligations in respect of the payment of
principal of, premium, if any, and interest on, this Senior Note shall
terminate.
In case any Senior Note shall at any time become mutilated, destroyed,
lost or stolen, and such Senior Note or evidence of the loss, theft or
destruction thereof satisfactory to the Bank and the Issuing and Paying Agent
and such other documents or proof as may be required by the Bank and the
Issuing and Paying Agent shall be delivered to the Issuing and Paying Agent,
the Bank shall issue a new Senior Note, of like tenor and principal amount,
having a serial number not contemporaneously outstanding, in exchange and
substitution for the mutilated Senior Note or in lieu of the Senior Note
destroyed, lost or stolen but, in the case of any destroyed, lost or stolen
Senior Note, only upon receipt of evidence satisfactory to the Bank and the
Issuing and Paying Agent that such Senior Note was destroyed, stolen or lost,
8
<PAGE> 27
and, if required, upon receipt of indemnity satisfactory to the Bank and the
Issuing and Paying Agent. Upon the issuance of any substituted Senior Note,
the Bank and the Issuing and Paying Agent may require the payment of a sum
sufficient to cover all expenses and reasonable charges connected with the
preparation and delivery of a new Senior Note. If any Senior Note which has
matured or has been redeemed or repaid or is about to mature or to be redeemed
or repaid shall become mutilated, destroyed, lost or stolen, the Bank may,
instead of issuing a substitute Senior Note, pay or authorize the payment of
the same (without surrender thereof except in the case of a mutilated Senior
Note) upon compliance by the holder with the provisions of this paragraph.
No recourse shall be had for the payment of principal of, premium, if
any, or interest on, this Senior Note for any claim based hereon, or otherwise
in respect hereof, against any shareholder, employee, agent, officer or
director, as such, past, present or future, of the Bank or of any successor
corporation, banking association or other legal entity (collectively,
"corporation"), either directly or through the Bank or any corporation,
whether by virtue of any constitution, statute or rule of law or by the
enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
The occurrence of any of the following events shall constitute an "Event
of Default" with respect to this Senior Note: (i) default in the payment of
any interest with respect to any of the Senior Notes issued by the Bank when
due, which continues for 30 calendar days; (ii) default in the payment of any
principal of, or premium, if any, on, any of the Senior Notes issued by the
Bank when due; (iii) the entry by a court having jurisdiction in the premises
of (a) a decree or order for relief in respect of the Bank in an involuntary
case or proceeding under any applicable United States federal or state
bankruptcy, insolvency, reorganization or other similar law or (b) a decree or
order appointing a conservator, receiver, liquidator, assignee, trustee,
sequestrator or any other similar official of the Bank, or of substantially
all of the property of the Bank, or ordering the winding up or liquidation of
the affairs of the Bank, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect for a period
of 60 consecutive days; or (iv) the commencement by the Bank of a voluntary
case or proceeding under any applicable United States federal or state
bankruptcy, insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated as bankrupt or insolvent, or the consent
by the Bank to the entry of a decree or order for relief in an involuntary
case or proceeding under any applicable United States federal or state
bankruptcy, insolvency,
9
<PAGE> 28
reorganization or other similar law or to the commencement of any bankruptcy
or insolvency case or proceeding, or the filing by the Bank of a petition or
answer or consent seeking reorganization or relief under any applicable United
States federal or state bankruptcy, insolvency, reorganization or similar law,
or the consent by the Bank to the filing of such petition or to the
appointment of or taking possession by a custodian, conservator, receiver,
liquidator, assignee, trustee, sequestrator or similar official of the Bank or
of substantially all of the property of the Bank, or the making by the Bank of
an assignment for the benefit of creditors, or the taking of corporate action
by the Bank in furtherance of any such action. If an Event of Default shall
occur and be continuing, the holder of this Senior Note may declare the
principal amount of, accrued interest and premium, if any, on, this Senior
Note due and payable immediately by written notice to the Bank. Upon such
declaration and notice, such principal amount, accrued interest and premium,
if any, shall become immediately due and payable. Any Event of Default with
respect to this Senior Note may be waived by the holder hereof.
The Issuing and Paying Agency Agreement provides that the Bank will
promptly notify, and provide copies of any such notice to, the Issuing and
Paying Agent, and the Issuing and Paying Agent will promptly mail by
first-class mail, postage prepaid, copies of such notice to the holders of the
Senior Notes, upon the occurrence of an Event of Default or of the curing or
waiver of an Event of Default.
Nothing contained herein shall prevent any consolidation or merger of the
Bank with any other corporation or successive consolidations or mergers in
which the Bank or its successor or successors shall be a party or parties, or
shall prevent any sale, conveyance, transfer or lease of the property of the
Bank as an entirety or substantially as an entirety to any other corporation
authorized to acquire and operate the same; provided, however (and the Bank
hereby covenants and agrees) that any such consolidation, merger, sale or
conveyance shall be upon the condition that: (i) immediately after such
consolidation, merger, sale or conveyance the corporation (whether the Bank or
such other corporation) formed by or surviving any such consolidation or
merger, or the corporation to which such sale or
10
<PAGE> 29
conveyance shall have been made, shall not be in default in the performance or
observance of any of the terms, covenants and conditions of this Senior Note
to be observed or performed by the Bank; and (ii) the corporation (if other
than the Bank) formed by or surviving any such consolidation or merger, or the
corporation to which such sale or conveyance shall have been made, shall be
organized under the laws of the United States of America or any state thereof
or the District of Columbia and shall expressly assume the due and punctual
payment of the principal of, premium, if any, and interest on, this Senior
Note. In case of any such consolidation, merger, sale, conveyance, transfer
or lease, and upon the assumption by the successor corporation of the due and
punctual performance of all of the covenants in this Senior Note to be
performed or observed by the Bank, such successor corporation shall succeed to
and be substituted for the Bank with the same effect as if it had been named
in this Senior Note as the Bank and thereafter the predecessor corporation
shall be relieved of all obligations and covenants in this Senior Note and may
be liquidated and dissolved.
Any action by the holder of this Senior Note shall bind all future
holders of this Senior Note, and of any Senior Note issued in exchange or
substitution herefor or in place hereof, in respect of anything done or
permitted by the Bank or by the Issuing and Paying Agent in pursuance of such
action.
The Issuing and Paying Agent shall maintain at its offices a register
(the register maintained in such office or any other office or agency of the
Issuing and Paying Agent in The City of New York, herein referred to as the
"Senior Note Register") in which, subject to such reasonable regulations as it
may prescribe, the Issuing and Paying Agent shall provide for the registration
of the Senior Notes and of transfers of the Senior Notes (in such capacity,
the "Senior Notes Registrar").
The transfer of this Senior Note is registrable in the Senior Note
Register, upon surrender of this Senior Note for registration of transfer at
the office or agency of the Issuing and Paying Agent in the Place of Payment,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Bank and the Issuing and Paying Agent duly executed by,
the holder hereof or his attorney duly authorized in writing, and thereupon
one or more new Senior Notes of like tenor, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
11
<PAGE> 30
No provision of this Senior Note shall alter or impair the obligation of
the Bank, which is absolute and unconditional, to pay principal of, premium,
if any, and interest on, this Senior Note in U.S. dollars at the times, places
and rate herein prescribed in accordance with its terms.
No service charge shall be made to a holder of this Senior Note for any
transfer or exchange of this Senior Note, but the Bank may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith.
Beneficial interests represented by this Senior Note are exchangeable for
definitive Senior Notes in registered form, of like tenor and of an equal
aggregate principal amount, only if (x) The Depository Trust Company, as
Depositary (the "Depositary") notifies the Bank that it is unwilling or unable
to continue as Depositary for this Senior Note or if at any time the
Depositary ceases to be a clearing agency registered under the Securities
Exchange Act of 1934, as amended, and a successor depositary is not appointed
by the Bank within 60 days, or (y) the Bank in its sole discretion determines
not to have such beneficial interests represented by this Senior Note. Any
Senior Note representing such beneficial interests that is exchangeable
pursuant to the preceding sentence shall be exchangeable in whole for
definitive Senior Notes in registered form, of like tenor and of an equal
aggregate principal amount, in minimum denominations of $250,000 and integral
multiples of $1,000 in excess thereof. Such definitive Senior Notes shall be
registered in the name or names of such person or persons as the Depositary
shall instruct the Issuing and Paying Agent.
Prior to due presentment of this Senior Note for registration of
transfer, the Bank, the Issuing and Paying Agent or any agent of the Bank or
the Issuing and Paying Agent may treat the holder in whose name this Senior
Note is registered as the owner hereof for all purposes, whether or not this
Senior Note be overdue, and neither the Bank, the Issuing and Paying Agent nor
any such agent shall be affected by notice to the contrary except as required
by applicable law.
All notices to the Bank under this Senior Note shall be in writing and
addressed to the Bank, 2980 Fairview Park Drive, Falls Church, Virginia 22042,
Attention: Treasurer, or to such other address of the Bank as the Bank may
notify the holders of the Senior Notes.
This Senior Note shall be governed by, and construed in accordance with,
the laws of the State of New York, without regard to conflicts of laws
principles and all applicable federal laws and regulations.
12
<PAGE> 31
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
the within Senior Note, shall be construed as though they were written out in
full according to applicable laws or regulations.
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT -- Custodian
-------------- ---------
(Cust) (Minor)
under Uniform Gifts to Minors Act
----------------------------------
(State)
Additional abbreviations may also be used
though not in the above list.
13
<PAGE> 32
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto _______________________________________________
______________________________________________________________________________
PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
____________________________
/___________________________/
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name and address,
including postal zip code, of assignee)
the within Senior Note and all rights thereunder, and hereby irrevocably
constitutes and appoints _____________________________________________________
______________________________________________________________________________
______________________________________________________________________________
to transfer said Senior Note on the books of the Issuing and Paying Agent,
with full power of substitution in the premises.
Dated: ---------------------------------
------------------ NOTICE: The signature to this
assignment must correspond with
the name as written upon the face
of the within Senior Note in
every particular, without
alteration or enlargement or any
change whatsoever.
- --------------------------------
Signature Guarantee
14
<PAGE> 33
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the Bank to
repay this Senior Note (or portion hereof specified below) pursuant to its
terms at a price equal to 100% of the principal amount hereof to be repaid,
together with accrued and unpaid interest hereon, payable to the date of
repayment, to the undersigned, at ____________________________________________
_____________________________________________________________________________.
(Please print or typewrite name and address of the undersigned)
For this Senior Note to be repaid, the undersigned must give to the
Issuing and Paying Agent at its offices located at 450 West 33rd Street, New
York, New York 10001, Attention: Global Trust Securities Group, or at such
other place or places of which the Bank shall from time to time notify the
holders of the Senior Notes, not more than 60 days nor less than 30 days prior
notice to the date of repayment, with this "Option to Elect Repayment" form
duly completed.
If less than the entire principal amount of this Senior Note is to be
repaid, specify the portion hereof (which shall be increments of $1,000) which
the holder elects to have repaid and specify the denomination or denominations
(which shall be $250,000 or an integral multiple of $1,000 in excess thereof)
of the Senior Notes to be issued to the holder for the portion of this Senior
Note not being repaid (in the absence of any such specification, one such
Senior Note will be issued for the portion not being repaid):
$
------------------------------ ------------------------------
NOTICE: The signature on this
Dated: "Option to Elect Repayment" form must
------------------------ correspond with the name as written upon
the face of the within Senior Note in every
particular, without alteration or
enlargement or any change whatsoever.
- --------------------------------
Signature Guarantee
15
<PAGE> 34
A-2
THIS SENIOR NOTE IS AN OBLIGATION SOLELY OF THE BANK AND WILL NOT BE AN
OBLIGATION OF, OR OTHERWISE GUARANTEED BY, ANY OTHER BANK OR CAPITAL ONE
FINANCIAL CORPORATION THIS SENIOR NOTE DOES NOT EVIDENCE DEPOSITS OF THE BANK
AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. THE OBLIGATIONS EVIDENCED BY THIS SENIOR NOTE RANK PARI
PASSU WITH ALL OTHER SENIOR UNSECURED INDEBTEDNESS OF THE BANK, EXCEPT DEPOSIT
LIABILITIES (AS PROVIDED IN SECTION 11(D)(11) OF THE FEDERAL DEPOSIT INSURANCE
ACT) AND OTHER OBLIGATIONS THAT ARE SUBJECT TO ANY PRIORITIES OR PREFERENCES.
IN A LIQUIDATION OR OTHER RESOLUTION OF THE BANK, THIS SENIOR NOTE WOULD BE
TREATED DIFFERENTLY FROM, AND HOLDERS OF THIS SENIOR NOTE COULD RECEIVE, IF
ANYTHING, SIGNIFICANTLY LESS THAN HOLDERS OF, DEPOSIT LIABILITIES OF THE BANK.
UNLESS THIS SENIOR NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE
"DEPOSITARY") TO THE BANK OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY SENIOR NOTE ISSUED UPON REGISTRATION OF TRANSFER OF, OR IN
EXCHANGE FOR, OR IN LIEU OF, THIS SENIOR NOTE IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH
NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
THIS SENIOR NOTE IS ISSUABLE ONLY IN FULLY REGISTERED FORM IN MINIMUM
DENOMINATIONS OF $250,000 AND INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF.
EACH OWNER OF A BENEFICIAL INTEREST IN THIS SENIOR NOTE MUST BE AN
INSTITUTIONAL INVESTOR WHO IS AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF
RULE 501 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND IS REQUIRED TO HOLD
A BENEFICIAL INTEREST IN $250,000 PRINCIPAL AMOUNT OR ANY INTEGRAL MULTIPLE OF
$1,000 IN EXCESS THEREOF OF THIS SENIOR NOTE AT ALL TIMES.
No. FLR-_____ REGISTERED
CUSIP NO.: _____
CAPITAL ONE BANK
GLOBAL SENIOR BANK NOTE
(Floating Rate)
<PAGE> 35
ORIGINAL ISSUE DATE: PRINCIPAL AMOUNT:
INITIAL INTEREST RATE: _____% MATURITY DATE:
INTEREST RATE INDEX MATURITY:
BASIS OR BASES:
IF LIBOR: REGULAR RECORD
[ ] Libor Telerate DATES (if other than the 15th day
[ ] Libor Reuters prior to each Interest Payment
Date):
INDEX CURRENCY:
SPREAD (PLUS OR MINUS) MINIMUM INTEREST RATE:
AND/OR SPREAD MULTIPLIER:
INTEREST PAYMENT PERIOD:
MAXIMUM INTEREST RATE:
INTEREST RESET PERIOD:
INTEREST PAYMENT DATES:
CALCULATION AGENT:
INITIAL INTEREST RESET DATE:
ANNUAL REDEMPTION
INTEREST RESET DATES: PERCENTAGE REDUCTION:
INITIAL REDEMPTION DATE: HOLDER'S OPTIONAL
REPAYMENT DATE(S):
INITIAL REDEMPTION
PERCENTAGE: DAY COUNT CONVENTION
[ ] 30/360 for the period
INTEREST CALCULATION: from __________ to __________.
[ ] Regular Floating Rate [ ] Actual/360 for the
Senior Note period from _______ to _______.
[ ] Floating Rate/Fixed Rate [ ] Actual/Actual for the
Senior Note period from __________ to
Fixed Rate Commencement Date: ____________.
Fixed Interest Rate:
[ ] Inverse Floating Rate Senior ORIGINAL ISSUE DISCOUNT
Note [ ] Yes
Fixed Interest Rate: [ ] No
ADDENDUM ATTACHED: Total Amount of OID:
[ ] Yes Yield to Maturity:
[ ] No Initial Accrual Period:
OTHER PROVISIONS: DEFAULT RATE: ______%
2
<PAGE> 36
Capital One Bank, a bank duly organized and existing under the laws of
the Commonwealth of Virginia (the "Bank"), for value received, hereby promises
to pay to CEDE & CO., or registered assigns, the principal sum of ____________
_______________________________________________________ United States Dollars
on the Maturity Date specified above (except to the extent redeemed or repaid
prior to the Maturity Date) and to pay interest thereon from and including the
Original Issue Date specified above or from and including the most recent
interest payment date to which interest on this Senior Note (or any
predecessor Senior Note) has been paid or duly provided for (each, an
"Interest Payment Date"), on the Interest Payment Dates specified above and at
maturity or upon earlier redemption or repayment, if applicable, commencing on
the first Interest Payment Date next succeeding the Original Issue Date (or,
if the Original Issue Date is between a Regular Record Date (as defined below)
and the Interest Payment Date immediately following such Regular Record Date,
on the second Interest Payment Date following the Original Issue Date), at a
rate per annum equal to the Initial Interest Rate specified above until the
Initial Interest Reset Date specified above and thereafter at a rate per annum
determined in accordance with the provisions hereof and any Addendum relating
hereto depending upon the Interest Rate Basis or Bases, if any, and such other
terms specified above, until the principal hereof is paid or made available
for payment, and (to the extent that the payment of such interest shall be
legally enforceable) at the Default Rate per annum specified above on any
overdue principal and premium, if any, and on any overdue installment of
interest. If no Default Rate is specified above, the Default Rate shall be
the Interest Rate on this Senior Note specified above. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment
Date will be paid to the person in whose name this Senior Note (or any
predecessor Senior Note) is registered at the close of business on the Regular
Record Date, which shall be the 15th calendar day (whether or not a Business
Day (as defined below)) prior to such Interest Payment Date (unless otherwise
specified on the face hereof) (each, a "Regular Record Date"); provided,
however, that interest payable at maturity or upon earlier redemption or
repayment, if applicable, will be payable to the person to whom principal
shall be payable. Any such interest not so punctually paid or duly provided
for shall forthwith cease to be payable to the holder as of the close of
business on such Regular Record Date and may either be paid to the person in
whose name this Senior Note (or any predecessor
3
<PAGE> 37
Senior Note) is registered at the close of business on a special record date
for the payment of such defaulted interest (the "Special Record Date") to be
fixed by the Bank, notice of which shall be given to the holders of Senior
Notes not less than 10 calendar days prior to such Special Record Date, or be
paid at any time in any other lawful manner.
Payment of principal of, premium, if any, and interest on, this Senior
Note will be made in such coin or currency of the United States of America as
at the time of payment is legal tender for payment of public and private
debts. The Bank will at all times appoint and maintain an issuing and paying
agent (the "Issuing and Paying Agent," which term shall include any successor
Issuing and Paying Agent), authorized by the Bank to pay principal of,
premium, if any, and interest on, this Senior Note on behalf of the Bank
pursuant to an issuing and paying agency agreement (the "Issuing and Paying
Agency Agreement") and having an office or agency (the "Issuing and Paying
Agent Office") in The City of New York or the city in which the Bank is
headquartered (the "Place of Payment"), where this Senior Note may be
presented or surrendered for payment and where notices, designations or
requests in respect of payments with respect to this Senior Note may be
served. The Bank has initially appointed Chemical Bank as the Issuing and
Paying Agent, with the Issuing and Paying Agent Office currently located at
450 West 33rd Street, New York, New York 10001, Attention: Global Trust
Securities Group. The Bank may remove the Issuing and Paying Agent pursuant
to the terms of the Issuing and Paying Agency Agreement, and appoint a
successor Issuing and Paying Agent.
Payment of principal of, premium, if any, and interest on, this Senior
Note due at maturity or upon earlier redemption or repayment, if applicable,
will be made in immediately available funds upon presentation and surrender of
this Senior Note to the Issuing and Paying Agent at the Issuing and Paying
Agent Office; provided that this Senior Note is presented to the Issuing and
Paying Agent in time for the Issuing and Paying Agent to make such payment in
accordance with its normal procedures. Payments of interest on this Senior
Note (other than at maturity or upon earlier redemption or repayment) will be
made by wire transfer to such account as has been appropriately designated to
the Issuing and Paying Agent by the person entitled to such payments.
4
<PAGE> 38
Reference herein to "this Senior Note", "hereof", "herein" and comparable
terms shall include an Addendum hereto if an Addendum is specified above.
Reference is hereby made to the further provisions of this Senior Note
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Bank has caused this Senior Note to be duly
executed.
CAPITAL ONE BANK
By:
-----------------------------------
Authorized Signatory
Dated:
ISSUING AND PAYING AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Senior Notes referred to in the Issuing and Paying Agency
Agreement.
CHEMICAL BANK,
as Issuing and Paying Agent
By:
--------------------------
Authorized Signatory
5
<PAGE> 39
[Reverse]
This Senior Note is one of a duly authorized issue of Senior Bank Notes
of the Bank due from 30 days to 30 years from date of issue (the "Senior
Notes").
If any Interest Payment Date (other than an Interest Payment Date at the
Maturity Date or date of earlier redemption or repayment of this Senior Note)
would otherwise fall on a day that is not a Business Day, such Interest
Payment Date shall be postponed to the next succeeding day that is a Business
Day, except that if an Interest Rate Basis is LIBOR, as indicated on the face
hereof, and such next Business Day falls in the next succeeding calendar
month, such Interest Payment Date shall be the immediately preceding day that
is a Business Day. Except as provided above, interest payments will be made
on the Interest Payment Dates shown on the face hereof. If the Maturity Date
or date of earlier redemption or repayment of this Senior Note falls on a day
which is not a Business Day, the related payment of principal of, premium, if
any, and interest on, this Senior Note will be made on the next succeeding
Business Day with the same force and effect as if made on the date such
payment was due, and no interest shall accrue on the amount so payable for the
period from and after such Maturity Date or date of earlier redemption or
repayment, as the case may be.
This Senior Note will not be subject to any sinking fund. If so provided
on the face of this Senior Note, this Senior Note may be redeemed by the Bank
either in whole or in part on and after the Initial Redemption Date, if any,
specified on the face hereof. If no Initial Redemption Date is specified on
the face hereof, this Senior Note may not be redeemed prior to the Maturity
Date. On and after the Initial Redemption Date, if any, this Senior Note may
be redeemed in increments of $1,000 (provided that any remaining principal
amount hereof shall be at least $250,000) at the option of the Bank at the
applicable Redemption Price (as defined below), together with unpaid interest
accrued hereon at the applicable rate borne by this Senior Note to the date of
redemption (each such date, a "Redemption Date"), on written notice given not
more than 60 nor less than 30 calendar days prior to the Redemption Date to
the registered holder hereof. Whenever less than all the Senior Notes at any
time outstanding are to be redeemed, the terms of
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<PAGE> 40
the Senior Notes to be so redeemed shall be selected by the Bank. If less
than all the Senior Notes with identical terms at any time outstanding are to
be redeemed, the Senior Notes to be so redeemed shall be selected by the
Issuing and Paying Agent by lot or in any usual manner approved by it. In the
event of redemption of this Senior Note in part only, a new Senior Note for
the unredeemed portion hereof shall be issued in the name of the holder hereof
upon the surrender hereof.
The "Redemption Price" shall initially be the Initial Redemption
Percentage specified on the face hereof of the principal amount of this Senior
Note to be redeemed and shall decline at each anniversary of the Initial
Redemption Date specified on the face hereof by the Annual Redemption
Percentage Reduction, if any, specified on the face hereof, of the principal
amount to be redeemed until the Redemption Price is 100% of such principal
amount.
This Senior Note may be subject to repayment at the option of the holder
hereof in accordance with the terms hereof on any Holder's Optional Repayment
Date(s), if any, specified on the face hereof. If no Holder's Optional
Repayment Date is specified on the face hereof, this Senior Note will not be
repayable at the option of the holder hereof prior to maturity. On any
Holder's Optional Repayment Date, this Senior Note will be repayable in whole
or in part in increments of $1,000 (provided that any remaining principal
amount hereof will be at least $250,000) at the option of the holder hereof at
a repayment price equal to 100% of the principal amount to be repaid, together
with accrued and unpaid interest hereon payable to the date of repayment. For
this Senior Note to be repaid in whole or in part at the option of the holder
hereof on a Holder's Optional Repayment Date, this Senior Note must be
delivered, with the form entitled "Option to Elect Repayment" attached hereto
duly completed, to the Issuing and Paying Agent at its offices located at 450
West 33rd Street, New York, New York 10001, Attention: Global Trust
Securities Group, or at such other address which the Bank shall from time to
time notify the holders of the Senior Notes, not more than 60 nor less than 30
calendar days prior to such Holder's Optional Repayment Date. In the event of
repayment of this Senior Note in part only, a new Senior Note for the unrepaid
portion hereof shall be issued in the name of the holder hereof upon the
surrender hereof. Exercise of such repayment option by the holder hereof
shall be irrevocable.
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<PAGE> 41
The interest rate borne by this Senior Note shall be determined as
follows:
1. If this Senior Note is designated as a Regular Floating Rate
Senior Note on the face hereof or if no designation is made for Interest
Calculation on the face hereof, then, except as described below or in an
Addendum hereto, this Senior Note shall bear interest at the rate
determined by reference to the applicable Interest Rate Basis or Bases
shown on the face hereof (i) plus or minus the applicable Spread, if any,
and/or (ii) multiplied by the applicable Spread Multiplier, if any,
specified and applied in the manner described on the face hereof.
Commencing on the Initial Interest Reset Date, the rate at which interest
on this Senior Note is payable shall be reset as of each Interest Reset
Date specified on the face hereof; provided, however, that the interest
rate in effect for the period from the Original Issue Date to the Initial
Interest Reset Date will be the Initial Interest Rate.
2. If this Senior Note is designated as a Floating Rate/Fixed Rate
Senior Note on the face hereof, then, except as described below or in an
Addendum hereto, this Senior Note shall bear interest at the rate
determined by reference to the applicable Interest Rate Basis or Bases
shown on the face hereof (i) plus or minus the applicable Spread, if any,
and/or (ii) multiplied by the applicable Spread Multiplier, if any,
specified and applied in the manner described on the face hereof.
Commencing on the Initial Interest Reset Date, the rate at which interest
on this Senior Note is payable shall be reset as of each Interest Reset
Date specified on the face hereof; provided, however, that (i) the
interest rate in effect for the period from the Original Issue Date to
the Initial Interest Reset Date shall be the Initial Interest Rate; and
(ii) the interest rate in effect commencing on, and including, the Fixed
Rate Commencement Date to the Maturity Date or date of earlier redemption
or repayment shall be the Fixed Interest Rate, if such a rate is
specified on the face hereof, or if no such Fixed Interest Rate is so
specified, the interest rate in effect hereon on the Business Day
immediately preceding the Fixed Rate Commencement Date.
8
<PAGE> 42
3. If this Senior Note is designated as an Inverse Floating Rate
Senior Note on the face hereof, then, except as described below or in an
Addendum hereto, this Senior Note shall bear interest equal to the Fixed
Interest Rate indicated on the face hereof minus the rate determined by
reference to the applicable Interest Rate Basis or Bases shown on the
face hereof (i) plus or minus the applicable Spread, if any, and/or (ii)
multiplied by the applicable Spread Multiplier, if any, specified and
applied in the manner described on the face hereof; provided, however,
that, unless otherwise specified on the face hereof, the interest rate
hereon will not be less than zero percent. Commencing on the Initial
Interest Reset Date, the rate at which interest on this Senior Note is
payable shall be reset as of each Interest Rate Reset Date specified on
the face hereof; provided, however, that the interest rate in effect for
the period from the Original Issue Date to the Initial Interest Reset
Date shall be the Initial Interest Rate.
Notwithstanding the foregoing, if this Senior Note is designated on the
face hereof as having an Addendum attached, this Senior Note shall bear
interest in accordance with the terms described in such Addendum.
Except as provided above, the interest rate in effect on each day shall
be (a) if such day is an Interest Reset Date, the interest rate determined as
of the Interest Determination Date (as defined below) immediately preceding
such Interest Reset Date or (b) if such day is not an Interest Reset Date, the
interest rate determined as of the Interest Determination Date immediately
preceding the next preceding Interest Reset Date. Each Interest Rate Basis
shall be the rate determined in accordance with the applicable provision
below. If any Interest Reset Date (which term includes the term Initial
Interest Reset Date unless the context otherwise requires) would otherwise be
a day that is not a Business Day, such Interest Reset Date shall be postponed
to the next succeeding day that is a Business Day, except that if an Interest
Rate Basis specified on the face hereof is LIBOR and such next Business Day
falls in the next succeeding calendar month, such Interest Reset Date shall be
the immediately preceding Business Day.
Unless otherwise specified on the face hereof, interest payable on this
Senior Note on any Interest Payment Date shall be
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<PAGE> 43
the amount of interest accrued from and including the next preceding Interest
Payment Date in respect of which interest has been paid (or from and including
the Original Issue Date specified on the face hereof, if no interest has been
paid), to but excluding the related Interest Payment Date or Maturity Date or
date of earlier redemption or repayment, as the case may be.
Unless otherwise specified on the face hereof, accrued interest hereon
shall be an amount calculated by multiplying the face amount hereof by an
accrued interest factor. Such accrued interest factor shall be computed by
adding the interest factor calculated for each day in the period for which
accrued interest is being calculated. Unless otherwise specified on the face
hereof, the interest factor for each such day shall be computed and paid on
the basis of a 360-day year of twelve 30-day months if the Day Count
Convention specified on the face hereof is "30/360" for the period specified
thereunder, or by dividing the interest rate applicable to such day by 360 if
the Day Count Convention specified on the face hereof is "Actual/360" for the
period specified thereunder or by the actual number of days in the year if the
Day Count Convention specified on the face hereof is "Actual/Actual" for the
period specified thereunder. If interest on this Senior Note is to be
calculated with reference to two or more Interest Rate Bases as specified on
the face hereof, the interest factor will be calculated in each period in the
same manner as if only one of the applicable Interest Rate Bases applied.
Unless otherwise specified on the face hereof, the "Interest
Determination Date" with respect to the Commercial Paper Rate, the Federal
Funds Rate and the Prime Rate will be the second Business Day preceding each
Interest Reset Date; the "Interest Determination Date" with respect to the
Eleventh District Cost of Funds Rate will be the last working day of the month
immediately preceding each Interest Reset Date on which the Federal Home Loan
Bank of San Francisco (the "FHLB of San Francisco") publishes the Index (as
defined below); the "Interest Determination Date" with respect to LIBOR shall
be the second London Business Day (as defined below) preceding each Interest
Reset Date; the "Interest Determination Date" with respect to the Treasury
Rate will be the day in the week in which the related Interest Reset Date
falls on which day Treasury Bills (as defined below) are normally auctioned
(Treasury Bills are normally sold at auction on Monday of each week, unless
that day is a legal holiday, in which case
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<PAGE> 44
the auction is normally held on the following Tuesday, except that such
auction may be held on the preceding Friday); provided, however, that if an
auction is held on the Friday of the week preceding the related Interest Reset
Date, the related Interest Determination Date shall be such preceding Friday;
and provided further that if an auction shall fall on any Interest Reset Date,
then the Interest Reset Date shall instead be the first Business Day following
such auction. If the interest rate of this Senior Note is determined with
reference to two or more Interest Rate Bases as specified on the face hereof,
the Interest Determination Date pertaining to this Senior Note will be the
latest Business Day which is at least two Business Days prior to such Interest
Reset Date on which each Interest Rate Basis is determinable. Each Interest
Rate Basis shall be determined on such date, and the applicable interest rate
shall take effect on the Interest Reset Date.
Unless otherwise specified on the face hereof, the "Calculation Date"
pertaining to any Interest Determination Date will be the earlier of (i) the
tenth calendar day after such Interest Determination Date or, if such day is
not a Business Day, the next succeeding Business Day and (ii) the Business Day
immediately preceding the applicable Interest Payment Date or Maturity Date or
date of earlier redemption or repayment, as the case may be. All calculations
on this Senior Note shall be made by the Calculation Agent specified on the
face hereof or such successor thereto as is duly appointed by the Bank.
All percentages resulting from any calculation on this Senior Note will
be rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or 0.09876545) would be rounded to 9.87655% (or
0.0987655) and 9.876544% (or 0.09876544) would be rounded to 9.87654% (or
0.0987654)), and all dollar amounts used in or resulting from such calculation
will be rounded to the nearest cent (with one-half cent being rounded upward).
As used herein, "Business Day" means, unless otherwise specified on the
face hereof, any day that is not a Saturday or Sunday and that in The City of
New York or in the city in which the Bank is headquartered is not a day on
which banking institutions are authorized or required by law, regulation or
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<PAGE> 45
executive order to close and, if an Interest Rate Basis shown on the face
hereof is LIBOR, is also a London Business Day.
As used herein, unless otherwise specified on the face hereof, "London
Business Day" means any day on which dealings in deposits in U.S. dollars are
transacted in the London interbank market.
Determination of Commercial Paper Rate. If an Interest Rate Basis for
this Senior Note is the Commercial Paper Rate, as indicated on the face
hereof, the Commercial Paper Rate shall be determined as of the applicable
Interest Determination Date (a "Commercial Paper Rate Interest Determination
Date"), as the Money Market Yield (as defined below) on such date of the rate
for commercial paper having the Index Maturity specified on the face hereof as
published by the Board of Governors of the Federal Reserve System in the
relevant weekly statistical release entitled "Statistical Release H.15(519),
Selected Interest Rates," or any successor publication of the Board of
Governors of the Federal Reserve System ("H.15(519)") under the heading
"Commercial Paper". In the event that such rate is not published by 3:00
P.M., New York City time, on the related Calculation Date, then the Commercial
Paper Rate shall be the Money Market Yield on such Commercial Paper Rate
Interest Determination Date of the rate for commercial paper having the Index
Maturity shown on the face hereof as published in the daily statistical
release entitled "Composite 3:30 P.M. Quotations for U.S. Government
Securities" or any successor publication published by the Federal Reserve Bank
of New York ("Composite Quotations") under the heading "Commercial Paper"
(with an Index Maturity of one month or three months being deemed to be
equivalent to an Index Maturity of 30 days or 90 days, respectively). If by
3:00 P.M., New York City time, on the related Calculation Date such rate is
not yet published in either H.15(519) or Composite Quotations, then the
Commercial Paper Rate on such Commercial Paper Rate Interest Determination
Date shall be calculated by the Calculation Agent and shall be the Money
Market Yield of the arithmetic mean of the offered rates at approximately
11:00 A.M., New York City time, on such Commercial Paper Rate Interest
Determination Date of three leading dealers of commercial paper in The City of
New York selected by the Calculation Agent for commercial paper having the
Index Maturity specified on the face hereof placed for an industrial issuer
whose bond rating is "AA," or the equivalent, from a nationally recognized
securities rating
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<PAGE> 46
agency; provided, however, that if any of the dealers selected as aforesaid by
the Calculation Agent are not quoting as mentioned in this sentence, the
Commercial Paper Rate determined as of such Commercial Paper Rate Interest
Determination Date shall be the rate in effect on such Commercial Paper Rate
Interest Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage)
calculated in accordance with the following formula:
Money Market Yield = D x 360 x 100
------------
360-(D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal and "M" refers to the
actual number of days in the interest period for which interest is being
calculated.
Determination of Eleventh District Cost of Funds Rate. If an Interest
Rate Basis for this Senior Note is the Eleventh District Cost of Funds Rate,
as indicated on the face hereof, the Eleventh District Cost of Funds Rate
shall be determined as of the applicable Interest Determination Date (an
"Eleventh District Cost of Funds Rate Interest Determination Date"), as the
rate equal to the monthly weighted average cost of funds for the calendar
month immediately preceding the month in which such Eleventh District Cost of
Funds Rate Interest Determination Date falls, as set forth under the caption
"11th District" on Telerate Page 7058 as of 11:00 A.M., San Francisco time, on
such Eleventh District Cost of Funds Rate Interest Determination Date. If
such rate does not appear on Telerate Page 7058 on any related Eleventh
District Cost of Funds Rate Interest Determination Date, the Eleventh District
Cost of Funds Rate for such Eleventh District Cost of Funds Rate Interest
Determination Date shall be the monthly weighted average cost of funds paid by
member institutions of the Eleventh Federal Home Loan Bank District that was
most recently announced (the "Index") by the FHLB of San Francisco as such
cost of funds for the calendar month immediately preceding the date of such
announcement. If the FHLB of San Francisco fails to announce such rate for
the calendar month immediately preceding such Eleventh District Cost of Funds
Rate Interest Determination Date, then the Eleventh District Cost of Funds
Rate determined as of such Eleventh District Cost of Funds Rate Interest
Determination Date shall be the Eleventh
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<PAGE> 47
District Cost of Funds Rate in effect on such Eleventh District Cost of Funds
Rate Interest Determination Date.
"Telerate Page 7058" means the display designated as page "7058" on the
Dow Jones Telerate Service (or such other page as may replace the 7058 page on
that service for the purpose of displaying the monthly weighted average cost
of funds paid by member institutions of the Eleventh Federal Home Loan Bank
District).
Determination of Federal Funds Rate. If an Interest Rate Basis for this
Senior Note is the Federal Funds Rate, as indicated on the face hereof, the
Federal Funds Rate shall be determined as of the applicable Interest
Determination Date (a "Federal Funds Rate Interest Determination Date"), as
the rate on such date for federal funds as published in H.15(519) under the
heading "Federal Funds (Effective)" or, if not so published by 3:00 P.M., New
York City time, on the related Calculation Date, the rate on such Federal
Funds Rate Interest Determination Date, as published in Composite Quotations
under the heading "Federal Funds/Effective Rate." If by 3:00 P.M., New York
City time, on the related Calculation Date such rate is not published in
either H.15(519) or Composite Quotations, then the Federal Funds Rate on such
Federal Funds Rate Interest Determination Date shall be calculated by the
Calculation Agent and shall be the arithmetic mean of the rates for the last
transaction in overnight United States dollar federal funds arranged prior to
9:00 A.M., New York City time on such Federal Funds Rate Interest
Determination Date by three leading brokers of federal funds transactions in
The City of New York selected by the Calculation Agent; provided, however,
that if any of the brokers selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, the Federal Funds Rate determined
as of such Federal Funds Rate Interest Determination Date shall be the Federal
Funds Rate in effect on such Federal Funds Rate Interest Determination Date.
Determination of LIBOR. If an Interest Rate Basis for this Senior Note
is LIBOR, as indicated on the face hereof, LIBOR shall be determined by the
Calculation Agent as of the applicable Interest Determination Date (a "LIBOR
Interest Determination Date") in accordance with the following provisions:
(a) With respect to any LIBOR Interest Determination Date, LIBOR
will be, as specified on the face hereof,
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<PAGE> 48
either: (i) the rate for deposits in U.S. dollars having the Index
Maturity designated on the face hereof, commencing on the second London
Business Day immediately following that LIBOR Interest Determination
Date, that appears on the Telerate Page 3750 as of 11:00 A.M., London
time, on that LIBOR Interest Determination Date ("LIBOR Telerate") or
(ii) the arithmetic mean of the offered rates for deposits in U.S.
dollars having the Index Maturity designated on the face hereof,
commencing on the second London Business Day immediately following that
LIBOR Interest Determination Date, that appear on the Reuters Screen LIBO
Page as of 11:00 A.M., London time, on that LIBOR Interest Determination
Date, if at least two such offered rates appear on the Reuters Screen
LIBO Page ("LIBOR Reuters"). "Telerate Page 3750" means the display
designated as page "3750" on the Telerate Service (or such other page as
may replace the 3750 page on that service or such other service or
services as may be nominated by the British Bankers' Association for the
purpose of displaying London interbank offered rates for U.S. dollar
deposits). "Reuters Screen LIBO Page" means the display designated as
page "LIBO" on the Reuters Monitor Money Rates Service (or such other
page as may replace the LIBO page on that service for the purpose of
displaying London interbank offered rates of major banks). If neither
LIBOR Telerate nor LIBOR Reuters is specified on the face hereof, LIBOR
will be determined as if LIBOR Telerate had been specified. If no rate
appears on the Telerate Page 3750, or if fewer than two offered rates
appear on the Reuters Screen LIBO Page, as applicable, LIBOR in respect
of that LIBOR Interest Determination Date will be determined as if the
parties had specified the rate described in (b) below.
(b) With respect to a LIBOR Interest Determination Date on which no
rate appears on Telerate Page 3750, as specified in (a)(i) above, or on
which fewer than two offered rates appear on the Reuters Screen LIBO
Page, as specified in (a)(ii) above, as applicable, LIBOR will be
determined on the basis of the rates at which deposits in U.S. dollars
having the Index Maturity designated on the face hereof, are offered at
approximately 11:00 A.M., London time, on that LIBOR Interest
Determination Date by four major banks in the London interbank market
selected by the Calculation Agent ("Reference Banks") to prime banks in
the
15
<PAGE> 49
London interbank market commencing on the second London Business Day
immediately following that LIBOR Interest Determination Date and in a
principal amount equal to an amount of not less than $1,000,000 that is
representative for a single transaction in such market at such time. The
Calculation Agent will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, LIBOR in respect of that LIBOR Interest
Determination Date will be the arithmetic mean of such quotations. If
fewer than two quotations are provided, LIBOR in respect of that LIBOR
Interest Determination Date will be the arithmetic mean of the rates
quoted at approximately 11:00 A.M., New York City time, on that LIBOR
Interest Determination Date by three major banks in The City of New York
selected by the Calculation Agent for loans in U.S. dollars to leading
European banks having the Index Maturity designated on the face hereof,
commencing on the second London Business Day immediately following that
LIBOR Interest Determination Date and in a principal amount equal to an
amount of not less than $1,000,000 that is representative for a single
transaction in such market at such time; provided, however, that if the
banks selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, LIBOR with respect to such LIBOR Interest
Determination Date will be the rate of LIBOR in effect on such date.
Determination of Prime Rate. If an Interest Rate Basis for this Senior
Note is the Prime Rate, as indicated on the face hereof, the Prime Rate shall
be determined as of the applicable Interest Determination Date (a "Prime Rate
Interest Determination Date") as the rate on such date as such rate is
published in H.15(519) under the heading "Bank Prime Loan". If such rate is
not published prior to 3:00 P.M., New York City time, on the related
Calculation Date, then the Prime Rate shall be the arithmetic mean of the
rates of interest publicly announced by each bank that appears on the Reuters
Screen USPRIME1 (as defined below) as such bank's prime rate or base lending
rate as in effect for such Prime Rate Interest Determination Date. If fewer
than four such rates appear on the Reuters Screen USPRIME1 for such Prime Rate
Interest Determination Date, the Prime Rate shall be the arithmetic mean of
the prime rates quoted on the basis of the actual number of days in the year
divided by a 360-day year as of the close of business on such Prime Rate
Interest
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<PAGE> 50
Determination Date by four major money center banks in The City of New York
selected by the Calculation Agent. If fewer than four major money center
banks provide such quotations, the Prime Rate will be determined by the
Calculation Agent and will be the arithmetic mean of four prime rates, quoted
on the basis of the actual number of days in the year divided by a 360-day
year, as of the close of business on such Prime Rate Interest Determination
Date as furnished in The City of New York by the major money center banks, if
any, that have provided quotations and as many substitute banks or trust
companies as is necessary in order to obtain four such prime rate quotations,
provided such substitute banks or trust companies are organized and doing
business under the laws of the United States, or any state thereof, each
having total equity capital of at least U.S. $500 million and being subject to
supervision or examination by federal or state authority, selected by the
Calculation Agent to provide such rate or rates; provided, however, that if
the banks or trust companies selected as aforesaid are not quoting as
mentioned in this sentence, the Prime Rate determined as of such Prime Rate
Interest Determination Date shall be the Prime Rate in effect on such Prime
Rate Interest Determination Date.
"Reuters Screen USPRIME1" means the display designated as page "USPRIME1"
on the Reuters Monitor Money Rates Service (or such other page as may replace
the USPRIME1 page on that service for the purpose of displaying prime rates or
base lending rates of major United States banks).
Determination of Treasury Rate. If an Interest Rate Basis for this
Senior Note is the Treasury Rate, as specified on the face hereof, the
Treasury Rate shall be determined as of the applicable Interest Determination
Date (a "Treasury Rate Interest Determination Date") as the rate applicable to
the most recent auction of direct obligations of the United States ("Treasury
Bills") having the Index Maturity specified on the face hereof, as such rate
is published in H.15(519) under the heading "Treasury Bills -- auction average
(investment)" or, if not published by 3:00 P.M., New York City time, on the
related Calculation Date, the auction average rate (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) as otherwise announced by the United States
Department of the Treasury. In the event that the results of the auction of
Treasury Bills having the Index Maturity specified on the face hereof are not
reported as
17
<PAGE> 51
provided by 3:00 P.M., New York City time, on such Calculation Date, or if no
such auction is held in a particular week, then the Treasury Rate shall be
calculated by the Calculation Agent and shall be a yield to maturity
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 P.M., New York City time,
on such Treasury Rate Interest Determination Date, of three leading primary
United States government securities dealers selected by the Calculation Agent,
for the issue of Treasury Bills with a remaining maturity closest to the Index
Maturity specified on the face hereof; provided, however, that if any of the
dealers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the Treasury Rate determined as of such Treasury
Rate Interest Determination Date shall be the Treasury Rate in effect on such
Treasury Rate Interest Determination Date.
Any provision contained herein, including the determination of an
Interest Rate Basis, the specification of an Interest Rate Basis, calculation
of the interest rate applicable to this Senior Note, its Interest Payment
Dates or any other matter relating hereto may be modified as specified in an
Addendum relating hereto if so specified on the face hereof.
Notwithstanding the foregoing, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, specified on the face hereof. In addition to any
Maximum Interest Rate applicable hereto pursuant to the above provisions, the
interest rate on this Senior Note will in no event be higher than the maximum
rate permitted by New York law, as the same may be modified by United States
law of general application. The Calculation Agent shall calculate the
interest rate hereon in accordance with the foregoing on or before each
Calculation Date. Unless otherwise specified on the face hereof, Chemical
Bank will be the Calculation Agent.
At the request of the Holder hereof, the Calculation Agent shall provide
to the Holder hereof the interest rate hereon then in effect and, if
determined, the interest rate which shall become effective as of the next
Interest Reset Date.
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<PAGE> 52
If this Senior Note is an Original Issue Discount Note and if an Event of
Default with respect to this Senior Note shall have occurred and be
continuing, the Default Amount (as defined hereafter) of this Senior Note may
be declared due and payable in the manner and with the effect provided herein.
The "Default Amount" shall be equal to the adjusted issue price as of the
first day of the accrual period as determined under Final Treasury Regulation
Section 1.1275-1(b) (or successor regulation) under the United States Internal
Revenue Code of 1986, as amended, in which the date of acceleration occurs
increased by the daily portion of the original issue discount for each day in
such accrual period ending on the date of acceleration, as determined under
Final Treasury Regulation Section 1.1272-1(b) (or successor regulation) under
the United States Internal Revenue Code of 1986, as amended. Upon payment of
(i) the principal, or premium, if any, so declared due and payable and (ii)
interest on any overdue principal and overdue interest or premium, if any (in
each case to the extent that the payment of such interest shall be legally
enforceable), all of the Bank's obligations in respect of the payment of
principal of, premium, if any, and interest on, this Senior Note shall
terminate.
In case any Senior Note shall at any time become mutilated, destroyed,
lost or stolen, and such Senior Note or evidence of the loss, theft or
destruction thereof satisfactory to the Bank and the Issuing and Paying Agent
and such other documents or proof as may be required by the Bank and the
Issuing and Paying Agent shall be delivered to the Issuing and Paying Agent,
the Bank shall issue a new Senior Note, of like tenor and principal amount,
having a serial number not contemporaneously outstanding, in exchange and
substitution for the mutilated Senior Note or in lieu of the Senior Note
destroyed, lost or stolen but, in the case of any destroyed, lost or stolen
Senior Note, only upon receipt of evidence satisfactory to the Bank and the
Issuing and Paying Agent that such Senior Note was destroyed, stolen or lost,
and, if required, upon receipt of indemnity satisfactory to the Bank and the
Issuing and Paying Agent. Upon the issuance of any substituted Senior Note,
the Bank and the Issuing and Paying Agent may require the payment of a sum
sufficient to cover all expenses and reasonable charges connected with the
preparation and delivery of a new Senior Note. If any Senior Note which has
matured or has been redeemed or repaid or is about to mature or to be redeemed
or repaid shall become mutilated, destroyed, lost or stolen, the Bank may,
instead of issuing a substitute Senior
19
<PAGE> 53
Note, pay or authorize the payment of the same (without surrender thereof
except in the case of a mutilated Senior Note) upon compliance by the holder
with the provisions of this paragraph.
No recourse shall be had for the payment of principal of, premium, if
any, or interest on, this Senior Note for any claim based hereon, or otherwise
in respect hereof, against any shareholder, employee, agent, officer or
director, as such, past, present or future, of the Bank or of any successor
corporation, banking association or other legal entity (collectively,
"corporation"), either directly or through the Bank or any corporation,
whether by virtue of any constitution, statute or rule of law or by the
enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
The occurrence of any of the following events shall constitute an "Event
of Default" with respect to this Senior Note: (i) default in the payment of
any interest with respect to any of the Senior Notes issued by the Bank when
due, which continues for 30 calendar days; (ii) default in the payment of any
principal of, or premium, if any, on, any of the Senior Notes issued by the
Bank when due; (iii) the entry by a court having jurisdiction in the premises
of (a) a decree or order for relief in respect of the Bank in an involuntary
case or proceeding under any applicable United States federal or state
bankruptcy, insolvency, reorganization or other similar law or (b) a decree or
order appointing a conservator, receiver, liquidator, assignee, trustee,
sequestrator or any other similar official of the Bank, or of substantially
all of the property of the Bank, or ordering the winding up or liquidation of
the affairs of the Bank, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect for a period
of 60 consecutive days; or (iv) the commencement by the Bank of a voluntary
case or proceeding under any applicable United States federal or state
bankruptcy, insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated as bankrupt or insolvent, or the consent
by the Bank to the entry of a decree or order for relief in an involuntary
case or proceeding under any applicable United States federal or state
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding, or the filing
by the Bank of a
20
<PAGE> 54
petition or answer or consent seeking reorganization or relief under any
applicable United States federal or state bankruptcy, insolvency,
reorganization or similar law, or the consent by the Bank to the filing of
such petition or to the appointment of or taking possession by a custodian,
conservator, receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Bank or of substantially all of the property of the Bank, or
the making by the Bank of an assignment for the benefit of creditors, or the
taking of corporate action by the Bank in furtherance of any such action. If
an Event of Default shall occur and be continuing, the holder of this Senior
Note may declare the principal amount of, accrued interest and premium, if
any, on, this Senior Note due and payable immediately by written notice to the
Bank. Upon such declaration and notice, such principal amount, accrued
interest and premium, if any, shall become immediately due and payable. Any
Event of Default with respect to this Senior Note may be waived by the holder
hereof.
The Issuing and Paying Agency Agreement provides that the Bank will
promptly notify, and provide copies of any such notice to, the Issuing and
Paying Agent, and the Issuing and Paying Agent will promptly mail by
first-class mail, postage prepaid, copies of such notice to the holders of the
Senior Notes, upon the occurrence of an Event of Default or of the curing or
waiver of an Event of Default.
Nothing contained herein shall prevent any consolidation or merger of the
Bank with any other corporation or successive consolidations or mergers in
which the Bank or its successor or successors shall be a party or parties, or
shall prevent any sale, conveyance, transfer or lease of the property of the
Bank as an entirety or substantially as an entirety to any other corporation
authorized to acquire and operate the same; provided, however (and the Bank
hereby covenants and agrees) that any such consolidation, merger, sale or
conveyance shall be upon the condition that: (i) immediately after such
consolidation, merger, sale or conveyance the corporation (whether the Bank or
such other corporation) formed by or surviving any such consolidation or
merger, or the corporation to which such sale or conveyance shall have been
made, shall not be in default in the performance or observance of any of the
terms, covenants and conditions of this Senior Note to be observed or
performed by the Bank; and (ii) the corporation (if other than the Bank)
formed by or surviving any such consolidation or merger, or the corporation
21
<PAGE> 55
to which such sale or conveyance shall have been made, shall be organized
under the laws of the United States of America or any state thereof or the
District of Columbia and shall expressly assume the due and punctual payment
of the principal of, premium, if any, and interest on, this Senior Note. In
case of any such consolidation, merger, sale, conveyance, transfer or lease,
and upon the assumption by the successor corporation of the due and punctual
performance of all of the covenants in this Senior Note to be performed or
observed by the Bank, such successor corporation shall succeed to and be
substituted for the Bank with the same effect as if it had been named in this
Senior Note as the Bank and thereafter the predecessor corporation shall be
relieved of all obligations and covenants in this Senior Note and may be
liquidated and dissolved.
Any action by the holder of this Senior Note shall bind all future
holders of this Senior Note, and of any Senior Note issued in exchange or
substitution hereof or in place hereof, in respect of anything done or
permitted by the Bank or by the Issuing and Paying Agent in pursuance of such
action.
The Issuing and Paying Agent shall maintain at its offices a register
(the register maintained in such office or any other office or agency of the
Issuing and Paying Agent in The City of New York, herein referred to as the
"Senior Note Register") in which, subject to such reasonable regulations as it
may prescribe, the Issuing and Paying Agent shall provide for the registration
of the Senior Notes and of transfers of the Senior Notes.
The transfer of this Senior Note is registrable in the Senior Note
Register, upon surrender of this Senior Note for registration of transfer at
the office or agency of the Issuing and Paying Agent in the Place of Payment,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Bank and the Issuing and Paying Agent duly executed by,
the holder hereof or his attorney duly authorized in writing, and thereupon
one or more new Senior Notes of like tenor, of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
No provision of this Senior Note shall alter or impair the obligation of
the Bank, which is absolute and unconditional, to
22
<PAGE> 56
pay principal of, premium, if any, and interest on, this Senior Note in U.S.
dollars at the times, places and rate herein prescribed in accordance with its
terms.
No service charge shall be made to a holder of this Senior Note for any
transfer or exchange of this Senior Note, but the Bank may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith.
Beneficial interests represented by this Senior Note are exchangeable
for definitive Senior Notes in registered form, of like tenor and of an equal
aggregate principal amount, only if (x) The Depository Trust Company, as
Depositary (the "Depositary") notifies the Bank that it is unwilling or unable
to continue as Depositary for this Senior Note or if at any time the
Depositary ceases to be a clearing agency registered under the Securities
Exchange Act of 1934, as amended, and a successor depositary is not appointed
by the Bank within 60 days, or (y) the Bank in its sole discretion determines
not to have such beneficial interests represented by this Senior Note. Any
Senior Note representing such beneficial interests that is exchangeable
pursuant to the preceding sentence shall be exchangeable in whole for
definitive Senior Notes in registered form, of like tenor and of an equal
aggregate principal amount, in minimum denominations of $250,000 and integral
multiples of $1,000 in excess thereof. Such definitive Senior Notes shall be
registered in the name or names of such person or persons as the Depositary
shall instruct the Issuing and Paying Agent.
Prior to due presentment of this Senior Note for registration of
transfer, the Bank, the Issuing and Paying Agent or any agent of the Bank or
the Issuing and Paying Agent may treat the holder in whose name this Senior
Note is registered as the owner hereof for all purposes, whether or not this
Senior Note be overdue, and neither the Bank, the Issuing and Paying Agent nor
any such agent shall be affected by notice to the contrary except as required
by applicable law.
All notices to the Bank under this Senior Note shall be in writing and
addressed to the Bank, 2980 Fairview Park Drive, Falls Church, Virginia 22042,
Attention: Treasurer, or to such other address of the Bank as the Bank may
notify the holders of the Senior Notes.
This Senior Note shall be governed by, and construed in accordance with,
the laws of the State of New York, without regard to conflicts of laws
principles and all applicable federal laws and regulations.
23
<PAGE> 57
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
the within Senior Note, shall be construed as though they were written out in
full according to applicable laws or regulations.
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT -- Custodian
---------- ---------
(Cust) (Minor)
under Uniform Gifts to Minors Act
-----------------------------------
(State)
Additional abbreviations may also be used
though not in the above list.
24
<PAGE> 58
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto _______________________________________________
______________________________________________________________________________
PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
____________________________
_________________________/___________________________/
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name and address,
including postal zip code, of assignee)
the within Senior Note and all rights thereunder, and hereby irrevocably
constitutes and appoints _____________________________________________________
______________________________________________________________________________
______________________________________________________________________________
to transfer said Senior Note on the books of the Issuing and Paying Agent,
with full power of substitution in the premises.
Dated: -----------------------------------
------------------ NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the within Senior Note in
every particular, without alteration or
enlargement or any change whatsoever.
- --------------------------------
Signature Guarantee
25
<PAGE> 59
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the Bank to
repay this Senior Note (or portion hereof specified below) pursuant to its
terms at a price equal to 100% of the principal amount hereof to be repaid,
together with accrued and unpaid interest hereon, payable to the date of
repayment, to the undersigned, at ____________________________________________
_____________________________________________________________________________.
(Please print or typewrite name and address of the undersigned)
For this Senior Note to be repaid, the undersigned must give to the
Issuing and Paying Agent at its offices located at 450 West 33rd Street, New
York, New York 10001, Attention: Global Trust Securities Group, or at such
other place or places of which the Bank shall from time to time notify the
holders of the Senior Notes, not more than 60 days nor less than 30 days prior
notice to the date of repayment, with this "Option to Elect Repayment" form
duly completed.
If less than the entire principal amount of this Senior Note is to be
repaid, specify the portion hereof (which shall be increments of $1,000) which
the holder elects to have repaid and specify the denomination or denominations
(which shall be $250,000 or an integral multiple of $1,000 in excess thereof)
of the Senior Notes to be issued to the holder for the portion of this Senior
Note not being repaid (in the absence of any such specification, one such
Senior Note will be issued for the portion not being repaid):
$
------------------------------ ------------------------------
NOTICE: The signature on this
Dated: "Option to Elect Repayment" form must
------------------------ correspond with the name as written upon
the face of the within Senior Note in every
particular, without alteration or
enlargement or any change whatsoever.
- --------------------------------
Signature Guarantee
26
<PAGE> 60
A-3
THIS SUBORDINATED NOTE IS AN OBLIGATION SOLELY OF THE BANK AND WILL NOT BE AN
OBLIGATION OF, OR OTHERWISE GUARANTEED BY, ANY OTHER BANK OR CAPITAL ONE
FINANCIAL CORPORATION. THIS SUBORDINATED NOTE DOES NOT EVIDENCE DEPOSITS OF
THE BANK AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENT AGENCY. THIS SUBORDINATED NOTE IS SUBORDINATED TO THE
CLAIMS OF DEPOSITORS AND GENERAL CREDITORS OF THE BANK, IS INELIGIBLE AS
COLLATERAL FOR A LOAN BY THE BANK AND IS NOT SECURED.
UNLESS THIS SUBORDINATED NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE
"DEPOSITARY") TO THE BANK OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY SUBORDINATED NOTE ISSUED UPON REGISTRATION OF TRANSFER OF,
OR IN EXCHANGE FOR, OR IN LIEU OF, THIS SUBORDINATED NOTE IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.,
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH
NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
THIS SUBORDINATED NOTE IS ISSUABLE ONLY IN FULLY REGISTERED FORM IN MINIMUM
DENOMINATIONS OF $250,000 AND INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF.
EACH OWNER OF A BENEFICIAL INTEREST IN THIS SUBORDINATED NOTE MUST BE AN
INSTITUTIONAL INVESTOR WHO IS AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF
RULE 501 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND IS REQUIRED TO HOLD
A BENEFICIAL INTEREST IN $250,000 PRINCIPAL AMOUNT OR ANY INTEGRAL MULTIPLE OF
$1,000 IN EXCESS THEREOF OF THIS SUBORDINATED NOTE AT ALL TIMES.
No. FXR-________
CUSIP NO.: _______ REGISTERED
CAPITAL ONE BANK
GLOBAL SUBORDINATED BANK NOTE
(Fixed Rate)
<PAGE> 61
ORIGINAL ISSUE DATE: PRINCIPAL AMOUNT:
INTEREST RATE: ______% MATURITY DATE:
INTEREST PAYMENT DATE(S): REGULAR RECORD DATES
[ ] At Maturity only (if other than May 1
[ ] May 15 and November 15 or November 1, prior to each
[ ] Other: Interest Payment Date):
INITIAL REDEMPTION INITIAL REDEMPTION
DATE: PERCENTAGE:
ANNUAL REDEMPTION HOLDER'S OPTIONAL
PERCENTAGE REDUCTION: REPAYMENT DATE(S):
DAY COUNT CONVENTION
[ ] 30/360 FOR THE PERIOD FROM TO .
[ ] ACTUAL/360 FOR THE PERIOD FROM TO .
[ ] ACTUAL/ACTUAL FOR THE PERIOD FROM TO .
ADDENDUM ATTACHED: ORIGINAL ISSUE DISCOUNT:
[ ] Yes [ ] Yes
[ ] No [ ] No
DEFAULT RATE: ______% Total Amount of OID:
Yield to Maturity:
Initial Accrual Period:
OTHER PROVISIONS:
2
<PAGE> 62
Capital One Bank, a bank duly authorized and existing under the laws of
the Commonwealth of Virginia (the "Bank"), for value received, hereby promises
to pay to CEDE & CO., or registered assigns, the principal sum of ____________
______________________________________________________________ United States
Dollars on the Maturity Date specified above (except to the extent redeemed or
repaid prior to the Maturity Date) and to pay interest thereon from and
including the Original Issue Date specified above or from and including the
most recent interest payment date on which interest on this Subordinated Note
(or any predecessor Subordinated Note) has been paid or duly provided for,
semi-annually on May 15 and November 15 of each year (unless otherwise
specified on the face hereof) (each, an "Interest Payment Date") and at
maturity or upon earlier redemption or repayment, if applicable, commencing on
the first Interest Payment Date next succeeding the Original Issue Date (or,
if the Original Issue Date is between a Regular Record Date (as defined below)
and the Interest Payment Date immediately following such Regular Record Date,
on the second Interest Payment Date following the Original Issue Date), at the
Interest Rate per annum specified above, until the principal hereof is paid or
made available for payment, and (to the extent that the payment of such
interest shall be legally enforceable) at the Default Rate per annum specified
above on any overdue principal and premium, if any, and on any overdue
installment of interest. If no Default Rate is specified above, the Default
Rate shall be the Interest Rate on this Subordinated Note specified above.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will be paid to the person in whose name this
Subordinated Note (or any predecessor Subordinated Note) is registered at the
close of business on the Regular Record Date, which shall be the May 1 and
November 1 (whether or not a Business Day (as defined below)), as the case may
be, next preceding the applicable Interest Payment Date (unless otherwise
specified on the face hereof) (each, a "Regular Record Date"); provided,
however, that interest payable at maturity or upon earlier redemption or
repayment, if applicable, will be payable to the person to whom principal
shall be payable. Any such interest not so punctually paid or duly provided
for shall forthwith cease to be payable to the holder as of the close of
business on such Regular Record Date, and may either be paid to the person in
whose name this Subordinated Note (or any predecessor Subordinated Note) is
registered at the close of business on a special record date for the payment
of such
3
<PAGE> 63
defaulted interest (the "Special Record Date") to be fixed by the Bank, notice
of which shall be given to the holders of Subordinated Notes not less than 10
calendar days prior to such Special Record Date, or be paid at any time in any
other lawful manner.
Payment of principal of, premium, if any, and interest on, this
Subordinated Note will be made in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts. The Bank will at all times appoint and maintain an issuing and
paying agent (the "Issuing and Paying Agent," which term shall include any
successor Issuing and Paying Agent), authorized by the Bank to pay principal
of, premium, if any, and interest on, this Subordinated Note on behalf of the
Bank pursuant to an issuing and paying agency agreement (the "Issuing and
Paying Agency Agreement") and having an office or agency (the "Issuing and
Paying Agent Office") The City of New York or in the city in which the Bank is
headquartered (the "Place of Payment"), where this Subordinated Note may be
presented or surrendered for payment and where notices, designations or
requests in respect of payments with respect to this Subordinated Note may be
served. The Bank has initially appointed Chemical Bank as the Issuing and
Paying Agent, with the Issuing and Paying Agent Office currently located at
450 West 33rd Street, New York, New York 10001, Attention: Global Trust
Securities Group. The Bank may remove the Issuing and Paying Agent pursuant
to the terms of the Issuing and Paying Agency Agreement and may appoint a
successor Issuing and Paying Agent.
Payment of principal of, premium, if any, and interest on, this
Subordinated Note due at maturity or upon earlier redemption or repayment, if
applicable, will be made in immediately available funds upon presentation and
surrender of this Subordinated Note to the Issuing and Paying Agent at the
Issuing and Paying Agent Office; provided that this Subordinated Note is
presented to the Issuing and Paying Agent in time for the Issuing and Paying
Agent to make such payment in accordance with its normal procedures. Payments
of interest on this Subordinated Note (other than at maturity or upon earlier
redemption or repayment) will be made by wire transfer to such account as has
been appropriately designated to the Issuing and Paying Agent by the person
entitled to such payments.
4
<PAGE> 64
Reference herein to "this Subordinated Note", "hereof", "herein" and
comparable terms shall include an Addendum hereto if an Addendum is specified
above.
Reference is hereby made to the further provisions of this Subordinated
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Bank has caused this Subordinated Note to be duly
executed.
CAPITAL ONE BANK
By:
------------------------------------------------
Authorized Signatory
Dated:
ISSUING AND PAYING AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Subordinated Notes referred to in the Issuing and Paying
Agency Agreement.
CHEMICAL BANK,
as Issuing and Paying Agent
By:
--------------------------
Authorized Signatory
5
<PAGE> 65
[Reverse]
This Subordinated Note is one of a duly authorized issue of Subordinated
Bank Notes of the Bank due from five years to 30 years from date of issue (the
"Subordinated Notes").
Payments of interest hereon will include interest accrued to but
excluding the relevant Interest Payment Date or Maturity Date or date of
earlier redemption or repayment, as the case may be. Unless otherwise
specified on the face hereof, interest on this Subordinated Note will be
computed on the basis of a 360-day year of twelve 30-day months.
Any provision contained herein with respect to the calculation of the
rate of interest applicable to this Subordinated Note, its Interest Payment
Dates or any other matter relating hereto may be modified as specified in an
Addendum relating hereto if so specified on the face hereof.
If any Interest Payment Date, Maturity Date or date of earlier redemption
or repayment of this Subordinated Note falls on a day which is not a Business
Day, the related payment of principal of, premium, if any, or interest on,
this Subordinated Note shall be made on the next succeeding Business Day with
the same force and effect as if made on the date such payment were due, and no
interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date, Maturity Date or date of earlier redemption or
repayment, as the case may be. "Business Day" means, unless otherwise
specified on the face hereof, any day that is not a Saturday or Sunday and
that in The City of New York or in the city in which the Bank is headquartered
is not a day on which banking institutions are authorized or required by law,
regulation or executive order to close.
The indebtedness of the Bank evidenced by this Subordinated Note,
including principal, premium, if any, and interest, shall be subordinate and
junior in right of payment to the Bank's obligations to its depositors, its
obligations under the Senior Notes (as such term is defined in the Issuing and
Paying Agency Agreement) and its obligations to its other creditors, including
its obligations to the Federal Reserve Bank, the Federal Deposit Insurance
Corporation and any rights acquired by the Federal
6
<PAGE> 66
Deposit Insurance Corporation as a result of loans made by the Federal Deposit
Insurance Corporation to the Bank or the purchase or guarantee of any of its
assets by the Federal Deposit Insurance Corporation, pursuant to the
provisions of 12 U.S.C. 1823(c), (d) or (e), whether such obligations are
outstanding at this date or are hereafter incurred, other than any obligations
which by their express terms rank on parity with, or junior to, the
Subordinated Notes. In case of any insolvency, receivership, conservatorship,
reorganization, readjustment of debt, marshalling of assets and liabilities or
similar proceedings or any liquidation or winding-up of or relating to the
Bank, whether voluntary or involuntary, all such obligations (except
obligations which rank on parity with or junior to, the Subordinated Notes)
shall be entitled to be paid in full before any payment shall be made on
account of the principal of, premium, if any, or interest on this Subordinated
Note. In the event of any such proceeding, after payment in full of all sums
owing with respect to such prior obligations, the holder of this Subordinated
Note, together with any obligations of the Bank ranking on a parity with this
Subordinated Note, shall be entitled to be paid from the remaining assets of
the Bank the unpaid principal, premium, if any, and interest before any
payment or other distribution, whether in cash, property or otherwise, shall
be made on account of any capital stock or any obligations of the Bank ranking
junior to this Subordinated Note.
This Subordinated Note will not be subject to any sinking fund. If so
provided on the face of this Subordinated Note, this Subordinated Note may be
redeemed by the Bank either in whole or in part on and after the Initial
Redemption Date, if any, specified on the face hereof. If no Initial
Redemption Date is specified on the face hereof, this Subordinated Note may
not be redeemed prior to the Maturity Date. On and after the Initial
Redemption Date, if any, this Subordinated Note may be redeemed in increments
of $1,000 (provided that any remaining principal amount hereof shall be at
least $250,000) at the option of the Bank at the applicable Redemption Price
(as defined below), together with unpaid interest accrued hereon at the
applicable rate borne by this Subordinated Note to the date of redemption
(each such date, a "Redemption Date"), on written notice given not more than
60 nor less than 30 calendar days prior to the Redemption Date to the
registered holder hereof. Whenever less than all the Subordinated Notes at
any time outstanding are to be redeemed, the terms of the Subordinated Notes
to be so redeemed
7
<PAGE> 67
shall be selected by the Bank. If less than all the Subordinated Notes with
identical terms at any time outstanding are to be redeemed, the Subordinated
Notes to be so redeemed shall be selected by the Issuing and Paying Agent by
lot or in any usual manner approved by it. In the event of redemption of this
Subordinated Note in part only, a new Subordinated Note for the unredeemed
portion hereof shall be issued in the name of the holder hereof upon the
surrender hereof.
The "Redemption Price" shall initially be the Initial Redemption
Percentage specified on the face hereof of the principal amount of this
Subordinated Note to be redeemed and shall decline at each anniversary of the
Initial Redemption Date specified on the face hereof by the Annual Redemption
Percentage Reduction, if any, specified on the face hereof, of the principal
amount to be redeemed until the Redemption Price is 100% of such principal
amount.
This Subordinated Note may be subject to repayment at the option of the
holder hereof in accordance with the terms hereof on any Holder's Optional
Repayment Date(s), if any, specified on the face hereof. If no Holder's
Optional Repayment Date is specified on the face hereof, this Subordinated
Note will not be repayable at the option of the holder hereof prior to
maturity. On any Holder's Optional Repayment Date, this Subordinated Note
will be repayable in whole or in part in increments of $1,000 (provided that
any remaining principal amount hereof will be at least $250,000) at the option
of the holder hereof at a repayment price equal to 100% of the principal
amount to be repaid, together with accrued and unpaid interest hereon payable
to the date of repayment. For this Subordinated Note to be repaid in whole or
in part at the option of the holder hereof on a Holder's Optional Repayment
Date, this Subordinated Note must be delivered, with the form entitled "Option
to Elect Repayment" attached hereto duly completed, to the Issuing and Paying
Agent at its offices located at 450 West 33rd Street, New York, New York
10001, Attention: Global Trust Securities Group, or at such other address
which the Bank shall from time to time notify the holders of the Subordinated
Notes, not more than 60 nor less than 30 calendar days prior to such Holder's
Optional Repayment Date. In the event of repayment of this Subordinated Note
in part only, a new Subordinated Note for the unrepaid portion hereof shall be
issued in the name of the holder hereof upon the surrender
8
<PAGE> 68
hereof. Exercise of such repayment option by the holder hereof shall be
irrevocable.
If this Subordinated Note is an Original Issue Discount Note and if an
Event of Default with respect to this Subordinated Note shall have occurred
and be continuing, the Default Amount (as defined hereafter) of this
Subordinated Note may be declared due and payable in the manner and with the
effect provided herein. The "Default Amount" shall be equal to the adjusted
issue price as of the first day of the accrual period as determined under
Final Treasury Regulation Section 1.1275-1(b) (or successor regulation) under
the United States Internal Revenue Code of 1986, as amended, in which the date
of acceleration occurs increased by the daily portion of the original issue
discount for each day in such accrual period ending on the date of
acceleration, as determined under Final Treasury Regulation Section
1.1272-1(b) (or successor regulation) under the United States Internal Revenue
Code of 1986, as amended. Upon payment of (i) the principal, or premium, if
any, so declared due and payable and (ii) interest on any overdue principal
and overdue interest or premium, if any (in each case to the extent that the
payment of such interest shall be legally enforceable), all of the Bank's
obligations in respect of the payment of principal of, premium, if any, and
interest on, this Subordinated Note shall terminate.
In case any Subordinated Note shall at any time become mutilated,
destroyed, lost or stolen, and such Subordinated Note or evidence of the loss,
theft or destruction thereof satisfactory to the Bank and the Issuing and
Paying Agent and such other documents or proof as may be required by the Bank
and the Issuing and Paying Agent shall be delivered to the Issuing and Paying
Agent, the Bank shall issue a new Subordinated Note, of like tenor and
principal amount, having a serial number not contemporaneously outstanding, in
exchange and substitution for the mutilated Subordinated Note or in lieu of
the Subordinated Note destroyed, lost or stolen but, in the case of any
destroyed, lost or stolen Subordinated Note, only upon receipt of evidence
satisfactory to the Bank and the Issuing and Paying Agent that such
Subordinated Note was destroyed, stolen or lost, and, if required, upon
receipt of indemnity satisfactory to the Bank and the Issuing and Paying
Agent. Upon the issuance of any substituted Subordinated Note, the Bank and
the Issuing and Paying Agent may require the payment of a sum sufficient to
cover
9
<PAGE> 69
all expenses and reasonable charges connected with the preparation and
delivery of a new Subordinated Note. If any Subordinated Note which has
matured or has been redeemed or repaid or is about to mature or to be redeemed
or repaid shall become mutilated, destroyed, lost or stolen, the Bank may,
instead of issuing a substitute Subordinated Note, pay or authorize the
payment of the same (without surrender thereof except in the case of a
mutilated Subordinated Note) upon compliance by the holder with the provisions
of this paragraph.
No recourse shall be had for the payment of principal of, premium, if
any, or interest on, this Subordinated Note for any claim based hereon, or
otherwise in respect hereof, against any shareholder, employee, agent, officer
or director, as such, past, present or future, of the Bank or of any successor
corporation, banking association or other legal entity (collectively,
"corporation"), either directly or through the Bank or any corporation,
whether by virtue of any constitution, statute or rule of law or by the
enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
An "Event of Default" with respect to this Subordinated Note will occur
if the Bank shall consent to, or a court or other governmental agency shall
enter a decree or order for, the appointment of a conservator or receiver or
other similar official in any liquidation, insolvency or similar proceeding
with respect to the Bank or all or substantially all of its property and, in
the case of a decree or order, such decree or order shall have remained in
force for a period of 60 consecutive days. If an Event of Default shall occur
and be continuing, the holder of this Subordinated Note may declare the
principal amount of, and accrued interest and premium, if any, on, this
Subordinated Note due and payable immediately by written notice to the Bank.
Upon such declaration and notice, such principal amount, accrued interest and
premium, if any, shall become immediately due and payable. Any Event of
Default with respect to this Subordinated Note may be waived by the holder
hereof. THERE IS NO RIGHT OF ACCELERATION IN THE CASE OF A DEFAULT IN THE
PAYMENT OF PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON, THIS SUBORDINATED
NOTE OR IN THE PERFORMANCE OF ANY OTHER OBLIGATION OF THE BANK UNDER THIS
SUBORDINATED NOTE OR UNDER ANY OTHER SECURITY ISSUED BY THE BANK.
10
<PAGE> 70
The Issuing and Paying Agency Agreement provides that the Bank will
promptly notify, and provide copies of any such notice to, the Issuing and
Paying Agent, and the Issuing and Paying Agent will promptly mail by
first-class mail, postage prepaid, copies of such notice to the holders of the
Subordinated Notes, upon the occurrence of an Event of Default or of the
curing or waiver of an Event of Default.
Nothing contained herein shall prevent any consolidation or merger of the
Bank with any other corporation or successive consolidations or mergers in
which the Bank or its successor or successors shall be a party or parties, or
shall prevent any sale, conveyance, transfer or lease of the property of the
Bank as an entirety or substantially as an entirety to any other corporation
authorized to acquire and operate the same; provided, however (and the Bank
hereby covenants and agrees) that any such consolidation, merger, sale or
conveyance shall be upon the condition that: (i) immediately after such
consolidation, merger, sale or conveyance the corporation (whether the Bank or
such other corporation) formed by or surviving any such consolidation or
merger, or the corporation to which such sale or conveyance shall have been
made, shall not be in default in the performance or observance of any of the
terms, covenants and conditions of this Subordinated Note to be observed or
performed by the Bank; and (ii) the corporation (if other than the Bank)
formed by or surviving any such consolidation or merger, or the corporation to
which such sale or conveyance shall have been made, shall be organized under
the laws of the United States of America or any state thereof or the District
of Columbia and shall expressly assume the due and punctual payment of the
principal of, premium, if any, and interest on, this Subordinated Note. In
case of any such consolidation, merger, sale, conveyance, transfer or lease,
and upon the assumption by the successor corporation of the due and punctual
performance of all of the covenants in this Subordinated Note to be performed
or observed by the Bank, such successor corporation shall succeed to and be
substituted for the Bank with the same effect as if it had been named in this
Subordinated Note as the Bank and thereafter the predecessor corporation shall
be relieved of all obligations and covenants in this Subordinated Note and may
be liquidated and dissolved.
Any action by the holder of this Subordinated Note shall bind all future
holders of this Subordinated Note, and of any Subordinated Note issued in
exchange or substitution herefor or
11
<PAGE> 71
in place hereof, in respect of anything done or permitted by the Bank or by
the Issuing and Paying Agent in pursuance of such action.
The Issuing and Paying Agent shall maintain at its offices a register
(the register maintained in such office or any other office or agency of the
Issuing and Paying Agent in The City of New York, herein referred to as the
"Subordinated Note Register") in which, subject to such reasonable regulations
as it may prescribe, the Issuing and Paying Agent shall provide for the
registration of the Subordinated Notes and of transfers of the Subordinated
Notes (in such capacity, the "Subordinated Notes Registrar").
The transfer of this Subordinated Note is registrable in the Subordinated
Note Register, upon surrender of this Subordinated Note for registration of
transfer at the office or agency of the Issuing and Paying Agent in the Place
of Payment, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Bank and the Issuing and Paying Agent
duly executed by, the holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Subordinated Notes of like tenor, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
No provision of this Subordinated Note shall alter or impair the
obligation of the Bank, which is absolute and unconditional, to pay principal
of, premium, if any, and interest on, this Subordinated Note in U.S. dollars
at the times, places and rate herein prescribed in accordance with its terms.
In the event of the failure by the Bank to make payment of principal of,
premium, if any, or interest on this Subordinated Note (and, in the case of
payment of interest, such failure to pay shall have continued for 2 days), the
Bank will, upon demand of the holder of this Subordinated Note, pay to the
holder of this Subordinated Note the whole amount then due and payable on this
Subordinated Note for principal, premium, if any, and interest, with interest
on the overdue principal of, premium, if any, and interest on, this
Subordinated Note to the extent provided for herein. If the Bank fails to pay
such amount upon such demand, the holder of this Subordinated Note may among
other
12
<PAGE> 72
things, institute a judicial proceeding for the collection of such amount.
No service charge shall be made to a holder of this Subordinated Note for
any transfer or exchange of this Subordinated Note, but the Bank may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith.
Beneficial interests represented by this Subordinated Note are
exchangeable for definitive Subordinated Notes in registered form, of like
tenor and of an equal aggregate principal amount, only if (x) The Depository
Trust Company, as Depositary (the "Depositary") notifies the Bank that it is
unwilling or unable to continue as Depositary for this Subordinated Note or if
at any time the Depositary ceases to be a clearing agency registered under the
Securities Exchange Act of 1934, as amended, and a successor depositary is not
appointed by the Bank within 60 days, or (y) the Bank in its sole discretion
determines not to have such beneficial interests represented by this
Subordinated Note. Any Subordinated Note representing such beneficial
interests that is exchangeable pursuant to the preceding sentence shall be
exchangeable in whole for definitive Subordinated Notes in registered form, of
like tenor and of an equal aggregate principal amount, in minimum
denominations of $250,000 and integral multiples of $1,000 in excess thereof.
Such definitive Subordinated Notes shall be registered in the name or names of
such person or persons as the Depositary shall instruct the Issuing and Paying
Agent.
Prior to due presentment of this Subordinated Note for registration of
transfer, the Bank, the Issuing and Paying Agent or any agent of the Bank or
the Issuing and Paying Agent may treat the holder in whose name this
Subordinated Note is registered as the owner hereof for all purposes, whether
or not this Subordinated Note be overdue, and neither the Bank, the Issuing
and Paying Agent nor any such agent shall be affected by notice to the
contrary except as required by applicable law.
All notices to the Bank under this Subordinated Note shall be in writing
and addressed to the Bank, 2980 Fairview Park Drive, Falls Church, Virginia
22042, Attention: Treasurer, or to such other address of the Bank as the Bank
may notify the holders of the Subordinated Notes.
This Subordinated Note shall be governed by, and construed in accordance
with, the laws of the State of New York, without regard to conflicts of laws
principles and all applicable federal laws and regulations.
13
<PAGE> 73
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
the within Subordinated Note, shall be construed as though they were written
out in full according to applicable laws or regulations.
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT -- Custodian
-------------- ---------
(Cust) (Minor)
under Uniform Gifts to Minors Act
----------------------------------
(State)
Additional abbreviations may also be used
though not in the above list.
14
<PAGE> 74
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto _______________________________________________
______________________________________________________________________________
PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
____________________________
/___________________________/
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name and address,
including postal zip code, of assignee)
the within Subordinated Note and all rights thereunder, and hereby irrevocably
constitutes and appoints _____________________________________________________
______________________________________________________________________________
______________________________________________________________________________
to transfer said Subordinated Note on the books of the Issuing and Paying
Agent, with full power of substitution in the premises.
Dated:
------------------ ---------------------------------
NOTICE: The signature to this
assignment must correspond with
the name as written upon the face
of the within Subordinated Note
in every particular, without
alteration or enlargement or any
change whatsoever.
- --------------------------------
Signature Guarantee
15
<PAGE> 75
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the Bank to
repay this Subordinated Note (or portion hereof specified below) pursuant to
its terms at a price equal to 100% of the principal amount hereof to be
repaid, together with accrued and unpaid interest hereon, payable to the date
of repayment, to the undersigned, at _________________________________________
_____________________________________________________________________________.
(Please print or typewrite name and address of the undersigned)
For this Subordinated Note to be repaid, the undersigned must give to the
Issuing and Paying Agent at its offices located at 450 West 33rd Street, New
York, New York 10001, Attention: Global Trust Securities Group, or at such
other place or places of which the Bank shall from time to time notify the
holders of the Subordinated Notes, not more than 60 days nor less than 30 days
prior notice to the date of repayment, with this "Option to Elect Repayment"
form duly completed.
If less than the entire principal amount of this Subordinated Note is to
be repaid, specify the portion hereof (which shall be increments of $1,000)
which the holder elects to have repaid and specify the denomination or
denominations (which shall be $250,000 or an integral multiple of $1,000 in
excess thereof) of the Subordinated Notes to be issued to the holder for the
portion of this Subordinated Note not being repaid (in the absence of any such
specification, one such Subordinated Note will be issued for the portion not
being repaid):
$
------------------------------ ------------------------------
NOTICE: The signature on this
Dated: "Option to Elect Repayment" form must
------------------------ correspond with the name as written upon
the face of the within Subordinated Note in
every particular, without alteration or
enlargement or any change whatsoever.
- --------------------------------
Signature Guarantee
16
<PAGE> 76
A-4
THIS SUBORDINATED NOTE IS AN OBLIGATION SOLELY OF THE BANK AND WILL NOT BE AN
OBLIGATION OF, OR OTHERWISE GUARANTEED BY, ANY OTHER BANK OR CAPITAL ONE
FINANCIAL CORPORATION. THIS SUBORDINATED NOTE DOES NOT EVIDENCE DEPOSITS OF
THE BANK AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR
ANY OTHER GOVERNMENT AGENCY. THIS SUBORDINATED NOTE IS SUBORDINATED TO THE
CLAIMS OF DEPOSITORS AND GENERAL CREDITORS OF THE BANK, IS INELIGIBLE AS
COLLATERAL FOR A LOAN BY THE BANK AND IS NOT SECURED.
UNLESS THIS SUBORDINATED NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE
"DEPOSITARY") TO THE BANK OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY SUBORDINATED NOTE ISSUED UPON REGISTRATION OF TRANSFER OF,
OR IN EXCHANGE FOR, OR IN LIEU OF, THIS SUBORDINATED NOTE IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.,
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH
NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
THIS SUBORDINATED NOTE IS ISSUABLE ONLY IN FULLY REGISTERED FORM IN MINIMUM
DENOMINATIONS OF $250,000 AND INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF.
EACH OWNER OF A BENEFICIAL INTEREST IN THIS SUBORDINATED NOTE MUST BE AN
INSTITUTIONAL INVESTOR WHO IS AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF
RULE 501 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND IS REQUIRED TO HOLD
A BENEFICIAL INTEREST IN $250,000 PRINCIPAL AMOUNT OR ANY INTEGRAL MULTIPLE OF
$1,000 IN EXCESS THEREOF OF THIS SUBORDINATED NOTE AT ALL TIMES.
No. FLR-__________ REGISTERED
CUSIP NO.: __________
CAPITAL ONE BANK
GLOBAL SUBORDINATED BANK NOTE
(Floating Rate)
<PAGE> 77
ORIGINAL ISSUE DATE: PRINCIPAL AMOUNT:
INITIAL INTEREST RATE: ______% MATURITY DATE:
INTEREST RATE INDEX MATURITY:
BASIS OR BASES:
IF LIBOR: REGULAR RECORD
[ ] Libor Telerate DATES (if other than the 15th day
[ ] Libor Reuters prior to each Interest Payment
Date):
INDEX CURRENCY:
MINIMUM INTEREST RATE:
SPREAD (PLUS OR MINUS)
AND/OR SPREAD MULTIPLIER: INTEREST PAYMENT PERIOD:
MAXIMUM INTEREST RATE: INTEREST RESET PERIOD:
INTEREST PAYMENT DATES: CALCULATION AGENT:
ANNUAL REDEMPTION
INITIAL INTEREST RESET DATE: PERCENTAGE REDUCTION:
HOLDER'S OPTIONAL
INTEREST RESET DATES: REPAYMENT DATE(S):
DAY COUNT CONVENTION
INITIAL REDEMPTION DATE: [ ] 30/360 for the period
from _______ to _________.
[ ] Actual/360 for the
INITIAL REDEMPTION PERCENTAGE: period from _______ to _______.
[ ] Actual/Actual for the
period from _______ to _______.
INTEREST CALCULATION:
[ ] Regular Floating Rate ORIGINAL ISSUE DISCOUNT
Subordinated Note [ ] Yes
[ ] Floating Rate/Fixed Rate [ ] No
Subordinated Note
Fixed Rate Commencement Date: Total Amount of OID:
Fixed Interest Rate: Yield to Maturity:
[ ] Inverse Floating Rate Initial Accrual Period:
Subordinated Note
Fixed Interest Rate: DEFAULT RATE: ______%
ADDENDUM ATTACHED:
[ ] Yes
[ ] No
OTHER PROVISIONS:
2
<PAGE> 78
Capital One Bank, a bank duly authorized and existing under the laws of
the Commonwealth of Virginia (the "Bank"), for value received, hereby promises
to pay to CEDE & CO., or registered assigns, the principal sum of ____________
________________________________________________________________ United States
Dollars on the Maturity Date specified above (except to the extent redeemed or
repaid prior to the Maturity Date) and to pay interest thereon from and
including the Original Issue Date specified above or from and including the
most recent interest payment date to which interest on this Subordinated Note
(or any predecessor Subordinated Note) has been paid or duly provided for
(each, an "Interest Payment Date"), on the Interest Payment Dates specified
above and at maturity or upon earlier redemption or repayment, if applicable,
commencing on the first Interest Payment Date next succeeding the Original
Issue Date (or, if the Original Issue Date is between a Regular Record Date
(as defined below) and the Interest Payment Date immediately following such
Regular Record Date, on the second Interest Payment Date following the
Original Issue Date), at a rate per annum equal to the Initial Interest Rate
specified above until the Initial Interest Reset Date specified above and
thereafter at a rate per annum determined in accordance with the provisions
hereof and any Addendum relating hereto depending upon the Interest Rate Basis
or Bases, if any, and such other terms specified above, until the principal
hereof is paid or made available for payment, and (to the extent that the
payment of such interest shall be legally enforceable) at the Default Rate per
annum specified above on any overdue principal and premium, if any, and on any
overdue installment of interest. If no Default Rate is specified above, the
Default Rate shall be the Interest Rate on this Subordinated Note specified
above. The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will be paid to the person in whose name this
Subordinated Note (or any predecessor Subordinated Note) is registered at the
close of business on the Regular Record Date, which shall be the 15th calendar
day (whether or not a Business Day(as defined below)) prior to such Interest
Payment Date (unless otherwise specified on the face hereof) (each, a "Regular
Record Date"); provided, however, that interest payable at maturity or upon
earlier redemption or repayment, if applicable, will be payable to the person
to whom principal shall be payable. Any such interest not so punctually paid
or duly provided for shall forthwith cease to be payable to the holder as of
the close of business on such Regular Record Date and may
3
<PAGE> 79
either be paid to the person in whose name this Subordinated Note (or any
predecessor Subordinated Note) is registered at the close of business on a
special record date for the payment of such defaulted interest (the "Special
Record Date") to be fixed by the Bank, notice of which shall be given to the
holders of Subordinated Notes not less than 10 calendar days prior to such
Special Record Date, or be paid at any time in any other lawful manner.
Payment of principal of, premium, if any, and interest on, this
Subordinated Note will be made in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts. The Bank will at all times appoint and maintain an issuing and
paying agent (the "Issuing and Paying Agent," which term shall include any
successor Issuing and Paying Agent), authorized by the Bank to pay principal
of, premium, if any, and interest on, this Subordinated Note on behalf of the
Bank pursuant to an issuing and paying agency agreement (the "Issuing and
Paying Agency Agreement") and having an office or agency (the "Issuing and
Paying Agent Office") in The City of New York or the city in which the Bank is
headquartered (the "Place of Payment"), where this Subordinated Note may be
presented or surrendered for payment and where notices, designations or
requests in respect of payments with respect to this Subordinated Note may be
served. The Bank has initially appointed Chemical Bank as the Issuing and
Paying Agent, with the Issuing and Paying Agent Office currently located at
450 West 33rd Street, New York, New York 10001, Attention: Global Trust
Securities Group. The Bank may remove the Issuing and Paying Agent pursuant
to the terms of the Issuing and Paying Agency Agreement, and appoint a
successor Issuing and Paying Agent.
Payment of principal of, premium, if any, and interest on, this
Subordinated Note due at maturity or upon earlier redemption or repayment, if
applicable, will be made in immediately available funds upon presentation and
surrender of this Subordinated Note to the Issuing and Paying Agent at the
Issuing and Paying Agent Office; provided that this Subordinated Note is
presented to the Issuing and Paying Agent in time for the Issuing and Paying
Agent to make such payment in accordance with its normal procedures. Payments
of interest on this Subordinated Note (other than at maturity or upon earlier
redemption or
4
<PAGE> 80
repayment) will be made by wire transfer to such account as has been
appropriately designated to the Issuing and Paying Agent by the person
entitled to such payments.
Reference herein to "this Subordinated Note", "hereof", "herein" and
comparable terms shall include an Addendum hereto if an Addendum is specified
above.
Reference is hereby made to the further provisions of this Subordinated
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Bank has caused this Subordinated Note to be duly
executed.
CAPITAL ONE BANK
By:
-----------------------------------
Authorized Signatory
Dated:
ISSUING AND PAYING AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Subordinated Notes referred to in the Issuing and Paying
Agency Agreement.
CHEMICAL BANK,
as Issuing and Paying Agent
By:
--------------------------
Authorized Signatory
5
<PAGE> 81
[Reverse]
This Subordinated Note is one of a duly authorized issue of Subordinated
Bank Notes of the Bank due from five years to 30 years from date of issue (the
"Subordinated Notes").
If any Interest Payment Date (other than an Interest Payment Date at the
Maturity Date or date of earlier redemption or repayment of this Subordinated
Note) would otherwise fall on a day that is not a Business Day, such Interest
Payment Date shall be postponed to the next succeeding day that is a Business
Day, except that if an Interest Rate Basis is LIBOR, as indicated on the face
hereof, and such next Business Day falls in the next succeeding calendar
month, such Interest Payment Date shall be the immediately preceding day that
is a Business Day. Except as provided above, interest payments will be made
on the Interest Payment Dates shown on the face hereof. If the Maturity Date
or date of earlier redemption or repayment of this Subordinated Note falls on
a day which is not a Business Day, the related payment of principal of,
premium, if any, and interest on, this Subordinated Note will be made on the
next succeeding Business Day with the same force and effect as if made on the
date such payment was due, and no interest shall accrue on the amount so
payable for the period from and after such Maturity Date or date of earlier
redemption or repayment, as the case may be.
The indebtedness of the Bank evidenced by this Subordinated Note,
including principal, premium, if any, and interest, shall be subordinate and
junior in right of payment to the Bank's obligations to its depositors, its
obligations under the Senior Notes (as such term is defined in the Issuing and
Paying Agency Agreement) and its obligations to its other creditors, including
its obligations to the Federal Reserve Bank, the Federal Deposit Insurance
Corporation and any rights acquired by the Federal Deposit Insurance
Corporation as a result of loans made by the Federal Deposit Insurance
Corporation to the Bank or the purchase or guarantee of any of its assets by
the Federal Deposit Insurance Corporation, pursuant to the provisions of 12
U.S.C. 1823(c), (d) or (e), whether such obligations are outstanding at this
date or are hereafter incurred, other than any obligations which by their
express terms rank on parity with, or junior to, the Subordinated Notes. In
case of any insolvency, receivership,
6
<PAGE> 82
conservatorship, reorganization, readjustment of debt, marshalling of assets
and liabilities or similar proceedings or any liquidation or winding-up of or
relating to the Bank, whether voluntary or involuntary, all such obligations
(except obligations which rank on parity with or junior to, the Subordinated
Notes) shall be entitled to be paid in full before any payment shall be made
on account of the principal of, premium, if any, or interest on this
Subordinated Note. In the event of any such proceeding, after payment in full
of all sums owing with respect to such prior obligations, the holder of this
Subordinated Note, together with any obligations of the Bank ranking on a
parity with this Subordinated Note, shall be entitled to be paid from the
remaining assets of the Bank the unpaid principal, premium, if any, and
interest, before any payment or other distribution, whether in cash, property
or otherwise, shall be made on account of any capital stock or any obligations
of the Bank ranking junior to this Subordinated Note.
This Subordinated Note will not be subject to any sinking fund. If so
provided on the face of this Subordinated Note, this Subordinated Note may be
redeemed by the Bank either in whole or in part on and after the Initial
Redemption Date, if any, specified on the face hereof. If no Initial
Redemption Date is specified on the face hereof, this Subordinated Note may
not be redeemed prior to the Maturity Date. On and after the Initial
Redemption Date, if any, this Subordinated Note may be redeemed in increments
of $1,000 (provided that any remaining principal amount hereof shall be at
least $250,000) at the option of the Bank at the applicable Redemption Price
(as defined below), together with unpaid interest accrued hereon at the
applicable rate borne by this Subordinated Note to the date of redemption
(each such date, a "Redemption Date"), on written notice given not more than
60 nor less than 30 calendar days prior to the Redemption Date to the
registered holder hereof. Whenever less than all the Subordinated Notes at
any time outstanding are to be redeemed, the terms of the Subordinated Notes
to be so redeemed shall be selected by the Bank. If less than all the
Subordinated Notes with identical terms at any time outstanding are to be
redeemed, the Subordinated Notes to be so redeemed shall be selected by the
Issuing and Paying Agent by lot or in any usual manner approved by it. In the
event of redemption of this Subordinated Note in part only, a new Subordinated
Note for the
7
<PAGE> 83
unredeemed portion hereof shall be issued in the name of the holder hereof
upon the surrender hereof.
The "Redemption Price" shall initially be the Initial Redemption
Percentage specified on the face hereof of the principal amount of this
Subordinated Note to be redeemed and shall decline at each anniversary of the
Initial Redemption Date specified on the face hereof by the Annual Redemption
Percentage Reduction, if any, specified on the face hereof, of the principal
amount to be redeemed until the Redemption Price is 100% of such principal
amount.
This Subordinated Note may be subject to repayment at the option of the
holder hereof in accordance with the terms hereof on any Holder's Optional
Repayment Date(s), if any, specified on the face hereof. If no Holder's
Optional Repayment Date is specified on the face hereof, this Subordinated
Note will not be repayable at the option of the holder hereof prior to
maturity. On any Holder's Optional Repayment Date, this Subordinated Note
will be repayable in whole or in part in increments of $1,000 (provided that
any remaining principal amount hereof will be at least $250,000) at the option
of the holder hereof at a repayment price equal to 100% of the principal
amount to be repaid, together with accrued and unpaid interest hereon payable
to the date of repayment. For this Subordinated Note to be repaid in whole or
in part at the option of the holder hereof on a Holder's Optional Repayment
Date, this Subordinated Note must be delivered, with the form entitled "Option
to Elect Repayment" attached hereto duly completed, to the Issuing and Paying
Agent at its offices located at 450 West 33rd Street, New York, New York
10001, Attention: Global Trust Securities Group, or at such other address
which the Bank shall from time to time notify the holders of the Subordinated
Notes, not more than 60 nor less than 30 calendar days prior to such Holder's
Optional Repayment Date. In the event of repayment of this Subordinated Note
in part only, a new Subordinated Note for the unrepaid portion hereof shall be
issued in the name of the holder hereof upon the surrender hereof. Exercise
of such repayment option by the holder hereof shall be irrevocable.
The interest rate borne by this Subordinated Note shall be determined as
follows:
8
<PAGE> 84
1. If this Subordinated Note is designated as a Regular Floating
Rate Subordinated Note on the face hereof or if no designation is made
for Interest Calculation on the face hereof, then, except as described
below or in an Addendum hereto, this Subordinated Note shall bear
interest at the rate determined by reference to the applicable Interest
Rate Basis or Bases shown on the face hereof (i) plus or minus the
applicable Spread, if any, and/or (ii) multiplied by the applicable
Spread Multiplier, if any, specified and applied in the manner described
on the face hereof. Commencing on the Initial Interest Reset Date, the
rate at which interest on this Subordinated Note is payable shall be
reset as of each Interest Reset Date specified on the face hereof;
provided, however, that the interest rate in effect for the period from
the Original Issue Date to the Initial Interest Reset Date will be the
Initial Interest Rate.
2. If this Subordinated Note is designated as a Floating
Rate/Fixed Rate Subordinated Note on the face hereof, then, except as
described below or in an Addendum hereto, this Subordinated Note shall
bear interest at the rate determined by reference to the applicable
Interest Rate Basis or Bases shown on the face hereof (i) plus or minus
the applicable Spread, if any, and/or (ii) multiplied by the applicable
Spread Multiplier, if any, specified and applied in the manner described
on the face hereof. Commencing on the Initial Interest Reset Date, the
rate at which interest on this Subordinated Note is payable shall be
reset as of each Interest Reset Date specified on the face hereof;
provided, however, that (i) the interest rate in effect for the period
from the Original Issue Date to the Initial Interest Reset Date shall be
the Initial Interest Rate; and (ii) the interest rate in effect
commencing on, and including, the Fixed Rate Commencement Date to the
Maturity Date or date of earlier redemption or repayment shall be the
Fixed Interest Rate, if such a rate is specified on the face hereof, or
if no such Fixed Interest Rate is so specified, the interest rate in
effect hereon on the Business Day immediately preceding the Fixed Rate
Commencement Date.
3. If this Subordinated Note is designated as an Inverse Floating
Rate Subordinated Note on the face hereof,
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<PAGE> 85
then, except as described below or in an Addendum hereto, this
Subordinated Note shall bear interest equal to the Fixed Interest Rate
indicated on the face hereof minus the rate determined by reference to
the applicable Interest Rate Basis or Bases shown on the face hereof (i)
plus or minus the applicable Spread, if any, and/or (ii) multiplied by
the applicable Spread Multiplier, if any, specified and applied in the
manner described on the face hereof; provided, however, that, unless
otherwise specified on the face hereof, the interest rate hereon will not
be less than zero percent. Commencing on the Initial Interest Reset
Date, the rate at which interest on this Subordinated Note is payable
shall be reset as of each Interest Rate Reset Date specified on the face
hereof; provided, however, that the interest rate in effect for the
period from the Original Issue Date to the Initial Interest Reset Date
shall be the Initial Interest Rate.
Notwithstanding the foregoing, if this Subordinated Note is designated on
the face hereof as having an Addendum attached, this Subordinated Note shall
bear interest in accordance with the terms described in such Addendum.
Except as provided above, the interest rate in effect on each day shall
be (a) if such day is an Interest Reset Date, the interest rate determined as
of the Interest Determination Date (as defined below) immediately preceding
such Interest Reset Date or (b) if such day is not an Interest Reset Date, the
interest rate determined as of the Interest Determination Date immediately
preceding the next preceding Interest Reset Date. Each Interest Rate Basis
shall be the rate determined in accordance with the applicable provision
below. If any Interest Reset Date (which term includes the term Initial
Interest Reset Date unless the context otherwise requires) would otherwise be
a day that is not a Business Day, such Interest Reset Date shall be postponed
to the next succeeding day that is a Business Day, except that if an Interest
Rate Basis specified on the face hereof is LIBOR and such next Business Day
falls in the next succeeding calendar month, such Interest Reset Date shall be
the immediately preceding Business Day.
Unless otherwise specified on the face hereof, interest payable on this
Subordinated Note on any Interest Payment Date
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<PAGE> 86
shall be the amount of interest accrued from and including the next preceding
Interest Payment Date in respect of which interest has been paid (or from and
including the Original Issue Date specified on the face hereof, if no interest
has been paid), to but excluding the related Interest Payment Date or Maturity
Date or date of earlier redemption or repayment, as the case may be.
Unless otherwise specified on the face hereof, accrued interest hereon
shall be an amount calculated by multiplying the face amount hereof by an
accrued interest factor. Such accrued interest factor shall be computed by
adding the interest factor calculated for each day in the period for which
accrued interest is being calculated. Unless otherwise specified on the face
hereof, the interest factor for each such day shall be computed and paid on
the basis of a 360-day year of twelve 30-day months if the Day Count
Convention specified on the face hereof is "30/360" for the period specified
thereunder, or by dividing the interest rate applicable to such day by 360 if
the Day Count Convention specified on the face hereof is "Actual/360" for the
period specified thereunder or by the actual number of days in the year if the
Day Count Convention specified on the face hereof is "Actual/Actual" for the
period specified thereunder. If interest on this Subordinated Note is to be
calculated with reference to two or more Interest Rate Bases as specified on
the face hereof, the interest factor will be calculated in each period in the
same manner as if only one of the applicable Interest Rate Bases applied.
Unless otherwise specified on the face hereof, the "Interest
Determination Date" with respect to the Commercial Paper Rate, the Federal
Funds Rate and the Prime Rate will be the second Business Day preceding each
Interest Reset Date; the "Interest Determination Date" with respect to the
Eleventh District Cost of Funds Rate will be the last working day of the month
immediately preceding each Interest Reset Date on which the Federal Home Loan
Bank of San Francisco (the "FHLB of San Francisco") publishes the Index (as
defined below); the "Interest Determination Date" with respect to LIBOR shall
be the second London Business Day (as defined below) preceding each Interest
Reset Date; the "Interest Determination Date" with respect to the Treasury
Rate will be the day in the week in which the related Interest Reset Date
falls on which day Treasury Bills (as defined below) are normally auctioned
(Treasury Bills are normally sold at auction on Monday
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<PAGE> 87
of each week, unless that day is a legal holiday, in which case the auction is
normally held on the following Tuesday, except that such auction may be held
on the preceding Friday); provided, however, that if an auction is held on the
Friday of the week preceding the related Interest Reset Date, the related
Interest Determination Date shall be such preceding Friday; and provided
further that if an auction shall fall on any Interest Reset Date, then the
Interest Reset Date shall instead be the first Business Day following such
auction. If the interest rate of this Subordinated Note is determined with
reference to two or more Interest Rate Bases as specified on the face hereof,
the Interest Determination Date pertaining to this Subordinated Note will be
the latest Business Day which is at least two Business Days prior to such
Interest Reset Date on which each Interest Rate Basis is determinable. Each
Interest Rate Basis shall be determined on such date, and the applicable
interest rate shall take effect on the Interest Reset Date.
Unless otherwise specified on the face hereof, the "Calculation Date"
pertaining to any Interest Determination Date will be the earlier of (i) the
tenth calendar day after such Interest Determination Date or, if such day is
not a Business Day, the next succeeding Business Day and (ii) the Business Day
immediately preceding the applicable Interest Payment Date or Maturity Date or
date of earlier redemption or repayment, as the case may be. All calculations
on this Subordinated Note shall be made by the Calculation Agent specified on
the face hereof or such successor thereto as is duly appointed by the Bank.
All percentages resulting from any calculation on this Subordinated Note
will be rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or 0.09876545) would be rounded to 9.87655% (or
0.0987655) and 9.876544% (or 0.09876544) would be rounded to 9.87654% (or
0.0987654)), and all dollar amounts used in or resulting from such calculation
will be rounded to the nearest cent (with one-half cent being rounded upward).
As used herein, "Business Day" means, unless otherwise specified on the
face hereof, any day that is not a Saturday or Sunday and that in The City of
New York or in the city in which the Bank is headquartered is not a day on
which banking
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<PAGE> 88
institutions are authorized or required by law, regulation or executive order
to close and, if an Interest Rate Basis shown on the face hereof is LIBOR, is
also a London Business Day.
As used herein, unless otherwise specified on the face hereof, "London
Business Day" means any day on which dealings in deposits in U.S. dollars are
transacted in the London interbank market.
Determination of Commercial Paper Rate. If an Interest Rate Basis for
this Subordinated Note is the Commercial Paper Rate, as indicated on the face
hereof, the Commercial Paper Rate shall be determined as of the applicable
Interest Determination Date (a "Commercial Paper Rate Interest Determination
Date"), as the Money Market Yield (as defined below) on such date of the rate
for commercial paper having the Index Maturity specified on the face hereof as
published by the Board of Governors of the Federal Reserve System in the
relevant weekly statistical release entitled "Statistical Release H.15(519),
Selected Interest Rates," or any successor publication of the Board of
Governors of the Federal Reserve System ("H.15(519)") under the heading
"Commercial Paper". In the event that such rate is not published by 3:00
P.M., New York City time, on the related Calculation Date, then the Commercial
Paper Rate shall be the Money Market Yield on such Commercial Paper Rate
Interest Determination Date of the rate for commercial paper having the Index
Maturity shown on the face hereof as published in the daily statistical
release entitled "Composite 3:30 P.M. Quotations for U.S. Government
Securities" or any successor publication published by the Federal Reserve Bank
of New York ("Composite Quotations") under the heading "Commercial Paper"
(with an Index Maturity of one month or three months being deemed to be
equivalent to an Index Maturity of 30 days or 90 days, respectively). If by
3:00 P.M., New York City time, on the related Calculation Date such rate is
not yet published in either H.15(519) or Composite Quotations, then the
Commercial Paper Rate on such Commercial Paper Rate Interest Determination
Date shall be calculated by the Calculation Agent and shall be the Money
Market Yield of the arithmetic mean of the offered rates at approximately
11:00 A.M., New York City time, on such Commercial Paper Rate Interest
Determination Date of three leading dealers of commercial paper in The City of
New York selected by the Calculation Agent for commercial paper having the
Index Maturity specified on the face
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<PAGE> 89
hereof placed for an industrial issuer whose bond rating is "AA," or the
equivalent, from a nationally recognized securities rating agency; provided,
however, that if any of the dealers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the Commercial Paper Rate
determined as of such Commercial Paper Rate Interest Determination Date shall
be the rate in effect on such Commercial Paper Rate Interest Determination
Date.
"Money Market Yield" shall be a yield (expressed as a percentage)
calculated in accordance with the following formula:
Money Market Yield = D x 360 x 100
------------
360-(D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal and "M" refers to the
actual number of days in the interest period for which interest is being
calculated.
Determination of Eleventh District Cost of Funds Rate. If an Interest
Rate Basis for this Subordinated Note is the Eleventh District Cost of Funds
Rate, as indicated on the face hereof, the Eleventh District Cost of Funds
Rate shall be determined as of the applicable Interest Determination Date (an
"Eleventh District Cost of Funds Rate Interest Determination Date"), as the
rate equal to the monthly weighted average cost of funds for the calendar
month immediately preceding the month in which such Eleventh District Cost of
Funds Rate Interest Determination Date falls, as set forth under the caption
"11th District" on Telerate Page 7058 as of 11:00 A.M., San Francisco time, on
such Eleventh District Cost of Funds Rate Interest Determination Date. If
such rate does not appear on Telerate Page 7058 on any related Eleventh
District Cost of Funds Rate Interest Determination Date, the Eleventh District
Cost of Funds Rate for such Eleventh District Cost of Funds Rate Interest
Determination Date shall be the monthly weighted average cost of funds paid by
member institutions of the Eleventh Federal Home Loan Bank District that was
most recently announced (the "Index") by the FHLB of San Francisco as such
cost of funds for the calendar month immediately preceding the date of such
announcement. If the FHLB of San Francisco fails to announce such rate for
the calendar month immediately preceding such Eleventh District Cost of Funds
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<PAGE> 90
Rate Interest Determination Date, then the Eleventh District Cost of Funds
Rate determined as of such Eleventh District Cost of Funds Rate Interest
Determination Date shall be the Eleventh District Cost of Funds Rate in effect
on such Eleventh District Cost of Funds Rate Interest Determination Date.
"Telerate Page 7058" means the display designated as page "7058" on the
Dow Jones Telerate Service (or such other page as may replace the 7058 page on
that service for the purpose of displaying the monthly weighted average cost
of funds paid by member institutions of the Eleventh Federal Home Loan Bank
District).
Determination of Federal Funds Rate. If an Interest Rate Basis for this
Subordinated Note is the Federal Funds Rate, as indicated on the face hereof,
the Federal Funds Rate shall be determined as of the applicable Interest
Determination Date (a "Federal Funds Rate Interest Determination Date"), as
the rate on such date for federal funds as published in H.15(519) under the
heading "Federal Funds (Effective)" or, if not so published by 3:00 P.M., New
York City time, on the related Calculation Date, the rate on such Federal
Funds Rate Interest Determination Date, as published in Composite Quotations
under the heading "Federal Funds/Effective Rate." If by 3:00 P.M., New York
City time, on the related Calculation Date such rate is not published in
either H.15(519) or Composite Quotations, then the Federal Funds Rate on such
Federal Funds Rate Interest Determination Date shall be calculated by the
Calculation Agent and shall be the arithmetic mean of the rates for the last
transaction in overnight United States dollar federal funds arranged prior to
9:00 A.M., New York City time on such Federal Funds Rate Interest
Determination Date by three leading brokers of federal funds transactions in
The City of New York selected by the Calculation Agent; provided, however,
that if any of the brokers selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, the Federal Funds Rate determined
as of such Federal Funds Rate Interest Determination Date shall be the Federal
Funds Rate in effect on such Federal Funds Rate Interest Determination Date.
Determination of LIBOR. If an Interest Rate Basis for this Subordinated
Note is LIBOR, as indicated on the face hereof, LIBOR shall be determined by
the Calculation Agent as of the
15
<PAGE> 91
applicable Interest Determination Date (a "LIBOR Interest Determination Date")
in accordance with the following provisions:
(a) With respect to any LIBOR Interest Determination Date, LIBOR
will be, as specified on the face hereof, either: (i) the rate for
deposits in U.S. dollars having the Index Maturity designated on the face
hereof, commencing on the second London Business Day immediately
following that LIBOR Interest Determination Date, that appears on the
Telerate Page 3750 as of 11:00 A.M., London time, on that LIBOR Interest
Determination Date ("LIBOR Telerate") or (ii) the arithmetic mean of the
offered rates for deposits in U.S. dollars having the Index Maturity
designated on the face hereof, commencing on the second London Business
Day immediately following that LIBOR Interest Determination Date, that
appear on the Reuters Screen LIBO Page as of 11:00 A.M., London time, on
that LIBOR Interest Determination Date, if at least two such offered
rates appear on the Reuters Screen LIBO Page ("LIBOR Reuters").
"Telerate Page 3750" means the display designated as page "3750" on the
Telerate Service (or such other page as may replace the 3750 page on that
service or such other service or services as may be nominated by the
British Bankers' Association for the purpose of displaying London
interbank offered rates for U.S. dollar deposits). "Reuters Screen LIBO
Page" means the display designated as page "LIBO" on the Reuters Monitor
Money Rates Service (or such other page as may replace the LIBO page on
that service for the purpose of displaying London interbank offered rates
of major banks). If neither LIBOR Telerate nor LIBOR Reuters is
specified on the face hereof, LIBOR will be determined as if LIBOR
Telerate had been specified. If no rate appears on the Telerate Page
3750, or if fewer than two offered rates appear on the Reuters Screen
LIBO Page, as applicable, LIBOR in respect of that LIBOR Interest
Determination Date will be determined as if the parties had specified the
rate described in (b) below.
(b) With respect to a LIBOR Interest Determination Date on which no
rate appears on Telerate Page 3750, as specified in (a)(i) above, or on
which fewer than two offered rates appear on the Reuters Screen LIBO
Page, as specified in (a)(ii) above, as applicable, LIBOR will be
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<PAGE> 92
determined on the basis of the rates at which deposits in U.S. dollars
having the Index Maturity designated on the face hereof, are offered at
approximately 11:00 A.M., London time, on that LIBOR Interest
Determination Date by four major banks in the London interbank market
selected by the Calculation Agent ("Reference Banks") to prime banks in
the London interbank market commencing on the second London Business Day
immediately following that LIBOR Interest Determination Date and in a
principal amount equal to an amount of not less than $1,000,000 that is
representative for a single transaction in such market at such time. The
Calculation Agent will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, LIBOR in respect of that LIBOR Interest
Determination Date will be the arithmetic mean of such quotations. If
fewer than two quotations are provided, LIBOR in respect of that LIBOR
Interest Determination Date will be the arithmetic mean of the rates
quoted at approximately 11:00 A.M., New York City time, on that LIBOR
Interest Determination Date by three major banks in The City of New York
selected by the Calculation Agent for loans in U.S. dollars to leading
European banks having the Index Maturity designated on the face hereof,
commencing on the second London Business Day immediately following that
LIBOR Interest Determination Date and in a principal amount equal to an
amount of not less than $1,000,000 that is representative for a single
transaction in such market at such time; provided, however, that if the
banks selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, LIBOR with respect to such LIBOR Interest
Determination Date will be the rate of LIBOR in effect on such date.
Determination of Prime Rate. If an Interest Rate Basis for this
Subordinated Note is the Prime Rate, as indicated on the face hereof, the
Prime Rate shall be determined as of the applicable Interest Determination
Date (a "Prime Rate Interest Determination Date") as the rate on such date as
such rate is published in H.15(519) under the heading "Bank Prime Loan". If
such rate is not published prior to 3:00 P.M., New York City time, on the
related Calculation Date, then the Prime Rate shall be the arithmetic mean of
the rates of interest publicly announced by each bank that appears on the
Reuters Screen
17
<PAGE> 93
USPRIME1 (as defined below) as such bank's prime rate or base lending rate as
in effect for such Prime Rate Interest Determination Date. If fewer than four
such rates appear on the Reuters Screen USPRIME1 for such Prime Rate Interest
Determination Date, the Prime Rate shall be the arithmetic mean of the prime
rates quoted on the basis of the actual number of days in the year divided by
a 360-day year as of the close of business on such Prime Rate Interest
Determination Date by four major money center banks in The City of New York
selected by the Calculation Agent. If fewer than four major money center
banks provide such quotations, the Prime Rate will be determined by the
Calculation Agent and will be the arithmetic mean of four prime rates, quoted
on the basis of the actual number of days in the year divided by a 360-day
year, as of the close of business on such Prime Rate Interest Determination
Date as furnished in The City of New York by the major money center banks, if
any, that have provided quotations and as many substitute banks or trust
companies as is necessary in order to obtain four such prime rate quotations,
provided such substitute banks or trust companies are organized and doing
business under the laws of the United States, or any state thereof, each
having total equity capital of at least U.S. $500 million and being subject to
supervision or examination by federal or state authority, selected by the
Calculation Agent to provide such rate or rates; provided, however, that if
the banks or trust companies selected as aforesaid are not quoting as
mentioned in this sentence, the Prime Rate determined as of such Prime Rate
Interest Determination Date shall be the Prime Rate in effect on such Prime
Rate Interest Determination Date.
"Reuters Screen USPRIME1" means the display designated as page "USPRIME1"
on the Reuters Monitor Money Rates Service (or such other page as may replace
the USPRIME1 page on that service for the purpose of displaying prime rates or
base lending rates of major United States banks).
Determination of Treasury Rate. If an Interest Rate Basis for this
Subordinated Note is the Treasury Rate, as specified on the face hereof, the
Treasury Rate shall be determined as of the applicable Interest Determination
Date (a "Treasury Rate Interest Determination Date") as the rate applicable to
the most recent auction of direct obligations of the United States ("Treasury
Bills") having the Index Maturity specified on the face hereof,
18
<PAGE> 94
as such rate is published in H.15(519) under the heading "Treasury Bills --
auction average (investment)" or, if not published by 3:00 P.M., New York City
time, on the related Calculation Date, the auction average rate (expressed as
a bond equivalent on the basis of a year of 365 or 366 days, as applicable,
and applied on a daily basis) as otherwise announced by the United States
Department of the Treasury. In the event that the results of the auction of
Treasury Bills having the Index Maturity specified on the face hereof are not
reported as provided by 3:00 P.M., New York City time, on such Calculation
Date, or if no such auction is held in a particular week, then the Treasury
Rate shall be calculated by the Calculation Agent and shall be a yield to
maturity (expressed as a bond equivalent on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) of the arithmetic mean of
the secondary market bid rates, as of approximately 3:30 P.M., New York City
time, on such Treasury Rate Interest Determination Date, of three leading
primary United States government securities dealers selected by the
Calculation Agent, for the issue of Treasury Bills with a remaining maturity
closest to the Index Maturity specified on the face hereof; provided, however,
that if any of the dealers selected as aforesaid by the Calculation Agent are
not quoting as mentioned in this sentence, the Treasury Rate determined as of
such Treasury Rate Interest Determination Date shall be the Treasury Rate in
effect on such Treasury Rate Interest Determination Date.
Any provision contained herein, including the determination of an
Interest Rate Basis, the specification of an Interest Rate Basis, calculation
of the interest rate applicable to this Subordinated Note, its Interest
Payment Dates or any other matter relating hereto may be modified as specified
in an Addendum relating hereto if so specified on the face hereof.
Notwithstanding the foregoing, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, specified on the face hereof. In addition to any
Maximum Interest Rate applicable hereto pursuant to the above provisions, the
interest rate on this Subordinated Note will in no event be higher than the
maximum rate permitted by New York law, as the same may be modified by United
States law of general application. The Calculation Agent shall calculate the
interest rate hereon in
19
<PAGE> 95
accordance with the foregoing on or before each Calculation Date. Unless
otherwise specified on the face hereof, Chemical Bank will be the Calculation
Agent.
At the request of the Holder hereof, the Calculation Agent shall provide
to the Holder hereof the interest rate hereon then in effect and, if
determined, the interest rate which shall become effective as of the next
Interest Reset Date.
If this Subordinated Note is an Original Issue Discount Note and if an
Event of Default with respect to this Subordinated Note shall have occurred
and be continuing, the Default Amount (as defined hereafter) of this
Subordinated Note may be declared due and payable in the manner and with the
effect provided herein. The "Default Amount" shall be equal to the adjusted
issue price as of the first day of the accrual period as determined under
Final Treasury Regulation Section 1.1275-1(b) (or successor regulation) under
the United States Internal Revenue Code of 1986, as amended, in which the date
of acceleration occurs increased by the daily portion of the original issue
discount for each day in such accrual period ending on the date of
acceleration, as determined under Final Treasury Regulation Section
1.1272-1(b) (or successor regulation) under the United States Internal Revenue
Code of 1986, as amended. Upon payment of (i) the principal, or premium, if
any, so declared due and payable and (ii) interest on any overdue principal
and overdue interest or premium, if any (in each case to the extent that the
payment of such interest shall be legally enforceable), all of the Bank's
obligations in respect of the payment of principal of, premium, if any, and
interest on, this Subordinated Note shall terminate.
In case any Subordinated Note shall at any time become mutilated,
destroyed, lost or stolen, and such Subordinated Note or evidence of the loss,
theft or destruction thereof satisfactory to the Bank and the Issuing and
Paying Agent and such other documents or proof as may be required by the Bank
and the Issuing and Paying Agent shall be delivered to the Issuing and Paying
Agent, the Bank shall issue a new Subordinated Note, of like tenor and
principal amount, having a serial number not contemporaneously outstanding, in
exchange and substitution for the mutilated Subordinated Note or in lieu of
the Subordinated Note destroyed, lost or stolen but, in the case of any
destroyed,
20
<PAGE> 96
lost or stolen Subordinated Note, only upon receipt of evidence satisfactory
to the Bank and the Issuing and Paying Agent that such Subordinated Note was
destroyed, stolen or lost, and, if required, upon receipt of indemnity
satisfactory to the Bank and the Issuing and Paying Agent. Upon the issuance
of any substituted Subordinated Note, the Bank and the Issuing and Paying
Agent may require the payment of a sum sufficient to cover all expenses and
reasonable charges connected with the preparation and delivery of a new
Subordinated Note. If any Subordinated Note which has matured or has been
redeemed or repaid or is about to mature or to be redeemed or repaid shall
become mutilated, destroyed, lost or stolen, the Bank may, instead of issuing
a substitute Subordinated Note, pay or authorize the payment of the same
(without surrender thereof except in the case of a mutilated Subordinated
Note) upon compliance by the holder with the provisions of this paragraph.
No recourse shall be had for the payment of principal of, premium, if
any, or interest on, this Subordinated Note for any claim based hereon, or
otherwise in respect hereof, against any shareholder, employee, agent, officer
or director, as such, past, present or future, of the Bank or of any successor
corporation, banking association or other legal entity (collectively,
"corporation"), either directly or through the Bank or any corporation,
whether by virtue of any constitution, statute or rule of law or by the
enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
An "Event of Default" with respect to this Subordinated Note will occur
if the Bank shall consent to, or a court or other governmental agency shall
enter a decree or order for, the appointment of a conservator or receiver or
other similar official in any liquidation, insolvency or similar proceeding
with respect to the Bank or all or substantially all of its property and, in
the case of a decree or order, such decree or order shall have remained in
force for a period of 60 consecutive days. If an Event of Default shall occur
and be continuing, the holder of this Subordinated Note may declare the
principal amount of, and accrued interest and premium, if any, on, this
Subordinated Note due and payable immediately by written notice to the Bank.
Upon such declaration and notice, such principal
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<PAGE> 97
amount, accrued interest and premium, if any, shall become immediately due and
payable. Any Event of Default with respect to this Subordinated Note may be
waived by the holder hereof. THERE IS NO RIGHT OF ACCELERATION IN THE CASE OF
A DEFAULT IN THE PAYMENT OF PRINCIPAL OF, PREMIUM, IF ANY, OR INTEREST ON,
THIS SUBORDINATED NOTE OR IN THE PERFORMANCE OF ANY OTHER OBLIGATION OF THE
BANK UNDER THIS SUBORDINATED NOTE OR UNDER ANY OTHER SECURITY ISSUED BY THE
BANK.
The Issuing and Paying Agency Agreement provides that the Bank will
promptly notify, and provide copies of any such notice to, the Issuing and
Paying Agent, and the Issuing and Paying Agent will promptly mail by
first-class mail, postage prepaid, copies of such notice to the holders of the
Subordinated Notes, upon the occurrence of an Event of Default or of the
curing or waiver of an Event of Default.
Nothing contained herein shall prevent any consolidation or merger of the
Bank with any other corporation or successive consolidations or mergers in
which the Bank or its successor or successors shall be a party or parties, or
shall prevent any sale, conveyance, transfer or lease of the property of the
Bank as an entirety or substantially as an entirety to any other corporation
authorized to acquire and operate the same; provided, however (and the Bank
hereby covenants and agrees) that any such consolidation, merger, sale or
conveyance shall be upon the condition that: (i) immediately after such
consolidation, merger, sale or conveyance the corporation (whether the Bank or
such other corporation) formed by or surviving any such consolidation or
merger, or the corporation to which such sale or conveyance shall have been
made, shall not be in default in the performance or observance of any of the
terms, covenants and conditions of this Subordinated Note to be observed or
performed by the Bank; and (ii) the corporation (if other than the Bank)
formed by or surviving any such consolidation or merger, or the corporation to
which such sale or conveyance shall have been made, shall be organized under
the laws of the United States of America or any state thereof or the District
of Columbia and shall expressly assume the due and punctual payment of the
principal of, premium, if any, and interest on, this Subordinated Note. In
case of any such consolidation, merger, sale, conveyance, transfer or lease,
and upon the assumption by the successor corporation of the due and punctual
performance of all of the covenants in this
22
<PAGE> 98
Subordinated Note to be performed or observed by the Bank, such successor
corporation shall succeed to and be substituted for the Bank with the same
effect as if it had been named in this Subordinated Note as the Bank and
thereafter the predecessor corporation shall be relieved of all obligations
and covenants in this Subordinated Note and may be liquidated and dissolved.
Any action by the holder of this Subordinated Note shall bind all future
holders of this Subordinated Note, and of any Subordinated Note issued in
exchange or substitution hereof or in place hereof, in respect of anything
done or permitted by the Bank or by the Issuing and Paying Agent in pursuance
of such action.
The Issuing and Paying Agent shall maintain at its offices a register
(the register maintained in such office or any other office or agency of the
Issuing and Paying Agent in The City of New York herein referred to as the
"Subordinated Note Register") in which, subject to such reasonable regulations
as it may prescribe, the Issuing and Paying Agent shall provide for the
registration of the Subordinated Notes and of transfers of the Subordinated
Notes.
The transfer of this Subordinated Note is registrable in the Subordinated
Note Register, upon surrender of this Subordinated Note for registration of
transfer at the office or agency of the Issuing and Paying Agent in the Place
of Payment, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Bank and the Issuing and Paying Agent
duly executed by, the holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Subordinated Notes of like tenor, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
No provision of this Subordinated Note shall alter or impair the
obligation of the Bank, which is absolute and unconditional, to pay principal
of, premium, if any, and interest on, this Subordinated Note in U.S. dollars
at the times, places and rate herein prescribed in accordance with its terms.
In the event of the failure by the Bank to make payment of principal of,
premium, if any, or interest on this Subordinated
23
<PAGE> 99
Note (and, in the case of payment of interest, such failure to pay shall have
continued for 2 days), the Bank will, upon demand of the holder of this
Subordinated Note, pay to the holder of this Subordinated Note the whole
amount then due and payable on this Subordinated Note for principal of,
premium, if any, and interest, with interest on the overdue principal of,
premium, if any, and interest on, this Subordinated Note to the extent
provided for herein. If the Bank fails to pay such amount upon such demand,
the holder of this Subordinated Note may among other things, institute a
judicial proceeding for the collection of such amount.
No service charge shall be made to a holder of this Subordinated Note for
any transfer or exchange of this Subordinated Note, but the Bank may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith.
Beneficial interests represented by this Subordinated Note are
exchangeable for definitive Subordinated Notes in registered form, of like
tenor and of an equal aggregate principal amount, only if (x) The Depository
Trust Company, as Depositary (the "Depositary") notifies the Bank that it is
unwilling or unable to continue as Depositary for this Subordinated Note or if
at any time the Depositary ceases to be a clearing agency registered under the
Securities Exchange Act of 1934, as amended, and a successor depositary is not
appointed by the Bank within 60 days, or (y) the Bank in its sole discretion
determines not to have such beneficial interests represented by this
Subordinated Note. Any Subordinated Note representing such beneficial
interests that is exchangeable pursuant to the preceding sentence shall be
exchangeable in whole for definitive Subordinated Notes in registered form, of
like tenor and of an equal aggregate principal amount, in minimum
denominations of $250,000 and integral multiples of $1,000 in excess thereof.
Such definitive Subordinated Notes shall be registered in the name or names of
such person or persons as the Depositary shall instruct the Issuing and Paying
Agent.
Prior to due presentment of this Subordinated Note for registration of
transfer, the Bank, the Issuing and Paying Agent or any agent of the Bank or
the Issuing and Paying Agent may treat the holder in whose name this
Subordinated Note is
24
<PAGE> 100
registered as the owner hereof for all purposes, whether or not this
Subordinated Note be overdue, and neither the Bank, the Issuing and Paying
Agent nor any such agent shall be affected by notice to the contrary except as
required by applicable law.
All notices to the Bank under this Subordinated Note shall be in writing
and addressed to the Bank, 2980 Fairview Park Drive, Falls Church, Virginia
22042, Attention: Treasurer, or to such other address of the Bank as the Bank
may notify the holders of the Subordinated Notes.
This Subordinated Note shall be governed by, and construed in accordance
with, the laws of the State of New York, without regard to conflicts of laws
principles, and all applicable federal laws and regulations.
25
<PAGE> 101
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
the within Subordinated Note, shall be construed as though they were written
out in full according to applicable laws or regulations.
TEN COM -- as tenants in common
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT -- Custodian
---------- ---------
(Cust) (Minor)
under Uniform Gifts to Minors Act
----------------------------------
(State)
Additional abbreviations may also be used
though not in the above list.
26
<PAGE> 102
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto _______________________________________________
______________________________________________________________________________
PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
____________________________
_________________________/___________________________/
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name and address,
including postal zip code, of assignee)
the within Subordinated Note and all rights thereunder, and hereby irrevocably
constitutes and appoints _____________________________________________________
______________________________________________________________________________
______________________________________________________________________________
to transfer said Subordinated Note on the books of the Issuing and Paying
Agent, with full power of substitution in the premises.
Dated: -----------------------------------
------------------ NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the within Subordinated
Note in every particular, without
alteration or enlargement or any change
whatsoever.
- --------------------------------
Signature Guarantee
27
<PAGE> 103
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the Bank to
repay this Subordinated Note (or portion hereof specified below) pursuant to
its terms at a price equal to 100% of the principal amount hereof to be
repaid, together with accrued and unpaid interest hereon, payable to the date
of repayment, to the undersigned, ____________________________________________
_____________________________________________________________________________.
(Please print or typewrite name and address of the undersigned)
For this Subordinated Note to be repaid, the undersigned must give to the
Issuing and Paying Agent at its offices located at 450 West 33rd Street, New
York, New York 10001, Attention: Global Trust Securities Group, or at such
other place or places of which the Bank shall from time to time notify the
holders of the Subordinated Notes, not more than 60 days nor less than 30 days
prior notice to the date of repayment, with this "Option to Elect Repayment"
form duly completed.
If less than the entire principal amount of this Subordinated Note is to
be repaid, specify the portion hereof (which shall be increments of $1,000)
which the holder elects to have repaid and specify the denomination or
denominations (which shall be $250,000 or an integral multiple of $1,000 in
excess thereof) of the Subordinated Notes to be issued to the holder for the
portion of this Subordinated Note not being repaid (in the absence of any such
specification, one such Subordinated Note will be issued for the portion not
being repaid):
$
------------------------------ ------------------------------
NOTICE: The signature on this
Dated: "Option to Elect Repayment" form must
------------------------ correspond with the name as written upon
the face of the within Subordinated Note in
every particular, without alteration or
enlargement or any change whatsoever.
- --------------------------------
Signature Guarantee
28
<PAGE> 1
EXHIBIT 4.2
CAPITAL ONE BANK
ISSUING AND PAYING AGENCY AGREEMENT
THIS AGREEMENT, dated as of April 30, 1996, between Capital One
Bank, a banking association chartered under the laws of the Commonwealth of
Virginia (the "Bank") and Chemical Bank, as issuing and paying agent (the
"Issuing and Paying Agent", which term shall also refer to any duly appointed
successor thereto).
WITNESSETH:
Section 1. Appointment of Issuing and Paying Agent. The Bank
proposes to issue from time to time its Deposit Notes (each, a "Deposit Note"
and collectively, the "Deposit Notes") in such amounts as may be duly
authorized by the Bank pursuant to the Distribution Agreement, dated April 30,
1996 (the "Distribution Agreement"), among the Bank and the agents named
therein (the "Agents").
Each Deposit Note will be issued in book-entry form and will be
represented by a global certificate (each, a "Global Deposit Note" and
collectively, the "Global Deposit Notes") registered in the name of The
Depository Trust Company, as depository ("DTC," which term includes any
successor thereof), or a nominee thereof (which successor shall be a clearing
agency registered under the Securities Exchange Act of 1934, as amended, if so
required by applicable law) (each beneficial interest in a Global Deposit
Note, a "Book-Entry Deposit Note" and collectively, the "Book-Entry Deposit
Notes").
The Bank hereby appoints the Issuing and Paying Agent to act, on the
terms and conditions specified herein, as issuing and paying agent for the
Global Deposit Notes and as registrar, transfer agent and authenticating agent
for the Global Deposit Notes and to perform such other responsibilities as are
described herein and the Issuing and Paying Agent hereby accepts such
appointments. The principal amount of the Global Deposit Notes which may be
issued pursuant to this Agreement is unlimited.
The Issuing and Paying Agent shall exercise due care in the performance
of its obligations hereunder and shall perform such obligations in a manner
consistent with industry standards.
<PAGE> 2
Section 2. Global Deposit Note Forms; Terms; Execution.
(i) The Global Deposit Notes shall be substantially (A) in the form
set forth in Exhibit A-1 hereto if such Global Deposit Note bears interest at
a fixed rate of interest (each such Global Deposit Note, a "Fixed Rate Global
Deposit Note" and collectively, the "Fixed Rate Global Deposit Notes"), (B)
in the form of Exhibit A-2 hereto if such Global Deposit Note bears interest
at a floating rate of interest determined by reference to an interest rate
basis specified therein (each such Global Deposit Note, a "Floating Rate
Global Deposit Note" and collectively, the "Floating Rate Global Deposit
Notes"), or (C) in such other form as the Bank may from time to time
designate.
(ii) Each issued Deposit Note shall have a maturity from 30 days to
30 years from its original date of issuance. The Deposit Notes shall be
issued in minimum denominations of $100,000 and in integral multiples of
$1,000 in excess thereof.
The interest rate borne by any particular Global Deposit Note may
vary from the interest rates borne by any other Global Deposit Notes. Any
such variation shall not affect the interest rate borne by any other Global
Deposit Notes previously issued hereunder.
(iii) The Bank will from time to time deliver or cause to be
delivered to the Issuing and Paying Agent a supply of blank Global Deposit
Notes in such quantities as the Bank shall determine, bearing consecutive
control numbers. Each Global Deposit Note will have been executed by the
manual or facsimile signature of an Authorized Representative (as defined in
Section 3 hereof) of the Bank. The Issuing and Paying Agent will acknowledge
receipt of the Global Deposit Notes delivered to it and will hold such blank
Global Deposit Notes in safekeeping in accordance with its customary practice
and shall complete, authenticate and deliver such Global Deposit Notes in
accordance with the provisions hereof.
Section 3. Authorized Representatives. From time to time, the Bank
will furnish the Issuing and Paying Agent with a certificate executed by an
officer of the Bank certifying the incumbency and specimen signatures of those
officers of the Bank authorized to execute Global Deposit Notes on behalf of
the Bank by manual or facsimile signature and to give instructions and notices
on behalf of the Bank hereunder (the "Authorized Representatives"). Until the
Issuing and Paying Agent receives a subsequent certificate, the Issuing and
Paying Agent shall be entitled to rely on the last such certificate delivered
to it for the purposes of determining the identities of Authorized
2
<PAGE> 3
Representatives of the Bank. Any Global Deposit Note bearing the manual or
facsimile signatures of persons who are Authorized Representatives of the Bank
on the date such signatures are affixed shall bind the Bank after the
completion, authentication and delivery thereof by the Issuing and Paying
Agent, notwithstanding that such persons shall have ceased to hold office on
the date such Global Deposit Note is so completed, authenticated and delivered
by the Issuing and Paying Agent.
Section 4. Issuance Instructions; Completion, Authentication and
Delivery of Global Deposit Notes.
(i) All instructions regarding the completion, authentication and
delivery of Global Deposit Notes shall be given by an Authorized
Representative of the Bank by telephone (confirmed in writing as soon as
practicable), by facsimile transmission or by other acceptable written means
by such Authorized Representative.
(ii) Upon receipt of the instructions described above, the Issuing
and Paying Agent shall cause to be withdrawn the necessary and applicable
Global Deposit Notes from safekeeping and, in accordance with such
instructions, shall:
(a) complete each Global Deposit Note;
(b) record each Global Deposit Note in the Deposit Note Register
(as defined in Section 10 hereof);
(c) cause each Global Deposit Note to be manually authenticated by
any one of the authorized signatories of the Issuing and Paying
Agent duly authorized and designated by it for such purpose;
and
(d) hold each Global Deposit Note in safekeeping on behalf of the
registered holder thereof;
provided that instructions regarding the completion and authentication of a
Global Deposit Note, whether delivered by facsimile transmission or by other
written means, are received by the Issuing and Paying Agent by 11:00 A.M., New
York City time, on the Business Day immediately preceding the date of
settlement relating to such Global Deposit Note (or 9:00 A.M., New York City
time, on the date of settlement relating to such Deposit Note if the trade
date and the date of settlement relating to such Deposit Note are the same
day). As used in this Agreement, the term "Business Day" shall mean any day
that is not a Saturday or Sunday and that is not a day on which banking
institutions in The City of New York or in the city in which the Bank is
3
<PAGE> 4
headquartered are authorized or required by law, regulation or executive order
to close, and with respect to LIBOR Notes (as defined in the applicable
Floating Rate Global Deposit Note) only, any day that is also a London
Business Day. As used in this Agreement, "London Business Day" means any day
on which dealings in deposits in U.S. dollars are transacted in the London
interbank market.
Section 5. Reliance on Instructions; Request for Instructions. The
Issuing and Paying Agent shall incur no liability to the Bank in acting
hereunder upon instructions contemplated hereby which the Issuing and Paying
Agent reasonably believed in good faith to have been given by an Authorized
Representative of the Bank. In the event a discrepancy exists between the
instructions as originally received by the Issuing and Paying Agent and any
subsequent written confirmation thereof, such original instructions will be
deemed controlling; provided that the Issuing and Paying Agent gives notice to
the Bank of such discrepancy promptly upon the receipt of such written
confirmation.
Any application by the Issuing and Paying Agent for written instructions
from the Bank may, at the option of the Issuing and Paying Agent, set forth in
writing any action proposed to be taken or omitted by the Issuing and Paying
Agent under this Agreement and the date on and/or after which such action
shall be taken or such omission shall be effective. The Issuing and Paying
Agent shall not be liable for any action taken by, or omission of, the Issuing
and Paying Agent in accordance with a proposal included in such application on
or after the date specified in such application (which date shall not be less
than three Business Days after the Bank has confirmed its receipt to the
Issuing and Paying Agent of such application, unless any such officer shall
have consented in writing to any earlier date) unless prior to taking any such
action (or the effective date in the case of an omission), the Issuing and
Paying Agent shall have received written instructions in response to such
application specifying the action to be taken or omitted.
Section 6. The Bank's Representations and Warranties. Each
instruction given to the Issuing and Paying Agent in accordance with Section 4
hereof shall constitute a representation and warranty to the Issuing and
Paying Agent by the Bank that the issuance and delivery of the Global Deposit
Notes have been duly and validly authorized by the Bank and that the Global
Deposit Notes, when completed and authenticated pursuant hereto, will
constitute the valid and legally binding obligations of the Bank. The Bank
further warrants that it is free to enter into this Agreement and to perform
the terms hereof.
4
<PAGE> 5
Section 7. Payments of Interest; Interest Payment Dates; Record
Dates. Interest payments on Global Deposit Notes with maturities of greater
than one year will be made: (i) in the case of the Fixed Rate Global Deposit
Notes, semi-annually on May 15 and November 15 of each year (unless otherwise
specified in any applicable Fixed Rate Global Deposit Notes) and (ii) in the
case of Floating Rate Global Deposit Notes, on such dates as are specified
therein (collectively, the "Interest Payment Dates") and, in each case, at
maturity or upon earlier redemption or repayment. All such interest payments
(other than interest due at maturity or upon earlier redemption or repayment)
will be made to the Holders (as defined in Section 10 hereof) in whose names
Fixed Rate Global Deposit Notes are registered at the close of business on May
1 or November 1 (unless otherwise specified in any applicable Fixed Rate
Global Deposit Notes) (whether or not a Business Day) next preceding such
Interest Payment Dates and in whose names Floating Rate Global Deposit Notes
are registered at the close of business on the fifteenth calendar day (whether
or not a Business Day) prior to each such Interest Payment Date (each such May
1, November 1 and fifteenth calendar day, a "Record Date"). Notwithstanding
the foregoing, if the Original Issue Date of any Global Deposit Note occurs
between a Record Date and the next succeeding Interest Payment Date, the first
payment of interest on any such Global Deposit Note will be made on the second
Interest Payment Date succeeding the Original Issue Date (as defined in the
Global Deposit Notes). Interest payments will be calculated and made in the
manner provided in the applicable Global Deposit Note.
If the Bank does not deposit adequate funds pursuant to Section 9
hereof with respect to the interest due on a Global Deposit Note on an
Interest Payment Date, such interest will cease to be due to the Holder of
such Global Deposit Note as of the close of business on the Record Date
relating to such Interest Payment Date and will be paid to the Holder of such
Global Deposit Note as of the close of business on a special record date to be
fixed by the Issuing and Paying Agent when funds for the payment of such
interest have been deposited pursuant to Section 9 hereof. Notice of such
special record date shall be given by the Issuing and Paying Agent, at the
Bank's expense, to the registered Holder of such Global Deposit Note not less
than 10 calendar days prior to such special record date.
Interest payments on Global Deposit Notes with maturities of one
year or less will be made only upon maturity upon presentation and surrender
of the applicable Note. Interest payments on Global Deposit Notes with
maturities of one year or less will be calculated in the manner provided in
the applicable Deposit Note.
5
<PAGE> 6
Section 8. Payment of Principal. The Issuing and Paying Agent will
pay the Holder of each Global Deposit Note the principal amount of each such
Global Deposit Note, together with accrued interest and premium, if any, at
maturity (or upon earlier redemption or repayment, if applicable).
Section 9. Deposit of Funds. The total amount of any principal of,
premium, if any, and interest due on Global Deposit Notes on any Interest
Payment Date or any maturity date or date of redemption or repayment shall be
paid by the Bank to the Issuing and Paying Agent no later than 1:00 P.M., New
York City time, in funds available for use by the Issuing and Paying Agent on
such date. The Bank will make such payment on such Global Deposit Notes via
Fedwire to an account specified by the Issuing and Paying Agent. Upon receipt
of funds from the Bank with respect to any Global Deposit Note, on such date
or as soon as possible thereafter, the Issuing and Paying Agent will pay by
separate wire transfer (using message entry instructions in a form previously
specified by DTC) to an account previously specified by DTC, in funds
available for immediate use by DTC, each payment of principal of, premium, if
any, and interest due on a Global Deposit Note on such date.
The Issuing and Paying Agent shall hold such amounts paid to it by the
Bank in trust for the Holders but shall, pending payment by it to the account
specified above, not be under any liability for interest on monies at any time
received by it pursuant to any of the terms of this Agreement or of the Global
Deposit Notes, nor shall the Issuing and Paying Agent be required to invest
such monies.
Section 10. Deposit Note Register; Registration, Transfer,
Exchange; Persons Deemed Owners.
(i) The Issuing and Paying Agent shall maintain at its offices the
Deposit Note Register. The Issuing and Paying Agent is hereby appointed as
Registrar for the purpose of registering Global Deposit Notes and transfers of
Global Deposit Notes as herein provided. The term "Deposit Note Register"
shall mean the definitive record in which shall be recorded the names,
addresses and taxpayer identifying numbers of the holders of the Global
Deposit Notes (the "Holders"), the serial and CUSIP numbers of each such
Global Deposit Note and the Original Issue Date thereof and details with
respect to the transfer and exchange of each Global Deposit Note.
(ii) Upon surrender for registration of transfer of any Global
Deposit Note at the offices of the Issuing and Paying Agent, the Bank shall
execute, and the Issuing and Paying Agent shall complete, authenticate and
deliver, in the name of the
6
<PAGE> 7
designated transferee or transferees, one or more new Global Deposit Notes of
any authorized denominations and having identical terms and provisions and for
an equal aggregate principal amount.
(iii) At the option of the Holder of a Global Deposit Note, such
Global Deposit Note may be exchanged for other Global Deposit Notes of any
authorized denominations of an equal aggregate principal amount and having
identical terms and provisions, upon surrender of the Global Deposit Notes to
be exchanged at the offices of the Issuing and Paying Agent. Whenever any
Global Deposit Notes are so surrendered for exchange, the Bank shall execute,
and the Issuing and Paying Agent shall complete, authenticate and deliver, the
Global Deposit Notes which the Holder of the Global Deposit Note making the
exchange is entitled to receive. Except as provided below, owners of
beneficial interests in a Global Deposit Note representing Book-Entry Deposit
Notes will not be entitled to have such Book-Entry Deposit Notes registered in
their names, will not receive or be entitled to receive physical delivery of
Deposit Notes in certificated form and will not be considered the owners or
holders thereof under this Agreement. However, if DTC notifies the Bank that
it is unwilling or unable to continue as depositary or if at any time DTC
ceases to be a clearing agency registered under the Securities Exchange Act of
1934, as amended, and a successor depositary is not appointed by the Bank
within 60 days, or the Bank in its sole discretion determines not to have
Book-Entry Deposit Notes represented by one or more Global Deposit Notes, then
Global Deposit Notes representing Book-Entry Deposit Notes may be exchanged in
whole for definitive Deposit Notes in registered form, of like tenor and of an
equal aggregate principal amount, in minimum denominations of $100,000 and
integral multiples of $1,000 in excess thereof, upon surrender of the Global
Deposit Notes to be exchanged at the offices of the Issuing and Paying Agent.
(iv) Notwithstanding the foregoing, the Issuing and Paying Agent
shall not register the transfer of or exchange (i) any Global Deposit Note
that has been called for redemption in whole or in part, except the unredeemed
portion of Global Deposit Notes being redeemed in part, (ii) any Global
Deposit Note during the period beginning at the opening of business 15 days
before the mailing of a notice of such redemption and ending at the close of
business on the day of such mailing, or (iii) any Global Deposit Note in
violation of the legend contained on the face of such Global Deposit Note.
(v) All Global Deposit Notes issued upon any registration of
transfer or exchange of Global Deposit Notes shall be the valid obligations of
the Bank, evidencing the same
7
<PAGE> 8
debt, and entitled to the same benefits as the Global Deposit Notes
surrendered upon such registration of transfer or exchange.
(vi) Every Global Deposit Note presented or surrendered for
registration of transfer or for exchange shall be duly endorsed, or be
accompanied by a written instrument of transfer with such evidence of due
authorization and guaranty of signature as may reasonably be required by the
Issuing and Paying Agent, in form satisfactory to the Issuing and Paying
Agent, duly executed by the Holder thereof or his attorney duly authorized in
writing.
(vii) No service charge shall be made to a holder of Global Deposit
Notes for any transfer or exchange of Global Deposit Notes, but the Bank may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.
(viii) The Bank and the Issuing and Paying Agent, and any agent of the
Bank or the Issuing and Paying Agent may treat the Holder in whose name a
Global Deposit Note is registered as the owner of such Global Deposit Note for
all purposes, whether or not such Global Deposit Note be overdue, and neither
the Bank, the Issuing and Paying Agent nor any such agent shall be affected by
notice to the contrary except as required by applicable law.
Section 11. Mutilated, Destroyed, Lost, or Stolen Global Deposit
Notes. In case any Global Deposit Note shall at any time become mutilated,
destroyed, lost or stolen, and such Global Deposit Note or evidence of the
loss, theft or destruction thereof satisfactory to the Bank and the Issuing
and Paying Agent (together with indemnity hereinafter referred to and such
other documents or proof as may be required by the Bank and the Issuing and
Paying Agent) shall be delivered to the Issuing and Paying Agent, the Bank
shall execute a new Global Deposit Note, of like tenor and principal amount,
having a serial number not contemporaneously outstanding, in exchange and
substitution for the mutilated Global Deposit Note or in lieu of the Global
Deposit Note destroyed, lost or stolen but, in the case of any destroyed, lost
or stolen Global Deposit Note, only upon receipt of evidence satisfactory to
the Issuing and Paying Agent and the Bank that such Global Deposit Note was
destroyed, stolen or lost, and, if required, upon receipt of indemnity
satisfactory to each of them. The Issuing and Paying Agent shall authenticate
any such substituted Global Deposit Note and deliver the same upon the written
request or authorization of any Authorized Representative of the Bank. Upon
the issuance of any substituted Global Deposit Note, the Bank and the Issuing
and Paying Agent may require the payment of a sum sufficient to cover all
expenses and reasonable charges connected with the preparation, authentication
and delivery of a new Global Deposit Note. If any
8
<PAGE> 9
Global Deposit Note which has matured or has been redeemed or repaid or is
about to mature or to be redeemed or repaid shall become mutilated, destroyed,
lost or stolen, the Bank may, instead of issuing a substitute Global Deposit
Note, pay or authorize the payment of the same (without surrender thereof
except in the case of a mutilated Global Deposit Note) upon compliance by the
Holder with the provisions of this Section.
Section 12. Cancellation. All Global Deposit Notes surrendered for
payment, registration of transfer or exchange shall, if surrendered to any
person other than the Issuing and Paying Agent, be delivered to the Issuing
and Paying Agent and shall be promptly cancelled by it. The Bank may at any
time deliver to the Issuing and Paying Agent for cancellation any Global
Deposit Notes previously authenticated and delivered hereunder which the Bank
may have acquired in any manner whatsoever, and all Global Deposit Notes so
delivered shall be promptly cancelled by the Issuing and Paying Agent. No
Global Deposit Note shall be authenticated in lieu of or in exchange for any
Global Deposit Note cancelled as provided in this Section, except as expressly
permitted by this Agreement. All cancelled Global Deposit Notes held by the
Issuing and Paying Agent shall be returned to the Bank.
Upon the written request of the Bank, the Issuing and Paying Agent
shall promptly cancel and return to the Bank all unissued Global Deposit Notes
in its possession.
Section 13. Redemption of Global Deposit Notes.
(i) If any Global Deposit Notes are to be redeemed prior to
maturity, the Bank shall notify the Issuing and Paying Agent not more than 60
nor less than 45 days prior to the date fixed by the Bank for such redemption
(the "Redemption Date") of the Bank's election to redeem such Global Deposit
Notes in whole or in part in increments of $1,000 (provided that any remaining
principal amount of such Global Deposit Notes shall be at least $100,000).
(ii) Whenever less than all the Global Deposit Notes at any time
outstanding are to be redeemed, the terms of the Global Deposit Notes to be so
redeemed shall be selected by the Bank. If less than all the Global Deposit
Notes with identical terms at any time outstanding are to be redeemed, the
Global Deposit Notes to be so redeemed shall be selected by the Issuing and
Paying Agent by lot or in any usual manner approved by it. The Issuing and
Paying Agent shall promptly notify the Bank in writing of the Global Deposit
Notes selected for redemption and, in the case of Global Deposit Notes
selected for partial redemption, the principal amount thereof to be redeemed.
9
<PAGE> 10
(iii) Unless otherwise specified in the applicable Global Deposit
Note, notice of redemption shall be given by the Issuing and Paying Agent, at
the Bank's expense, by first-class mail, postage prepaid, mailed not more than
60 nor less than 30 calendar days prior to the Redemption Date, to each
Holder of such Global Deposit Note to be redeemed, at its address appearing in
the Deposit Note Register. All notices of redemption shall identify the
Global Deposit Notes to be redeemed (including CUSIP number) and shall state:
(i) the Redemption Date; (ii) the redemption price, which shall be determined
in accordance with the terms of the Global Deposit Note (the "Redemption
Price"), (iii) if less than all of the Global Deposit Notes at any time
outstanding are to be redeemed, the identification (and, in the case of
partial redemption, the principal amounts) of the particular Global Deposit
Notes to be redeemed; (iv) that on the Redemption Date the Redemption Price
plus accrued interest, if any, to the Redemption Date will become due and
payable with respect to each Global Deposit Note to be redeemed and that
interest thereon will cease to accrue on and after said date; and (v) the
place or places where such Global Deposit Notes are to be surrendered for
payment.
(iv) Notice of redemption having been given as described above, the
Global Deposit Notes so to be redeemed shall, on the Redemption Date, become
due and payable at the Redemption Price, and from and after such date such
Global Deposit Notes shall cease to bear interest. Upon surrender of any such
Global Deposit Notes for redemption in accordance with such notice, the
Issuing and Paying Agent shall pay, and the Bank shall reimburse the Issuing
and Paying Agent for, such Global Deposit Notes at the Redemption Price,
together with unpaid interest accrued on such Global Deposit Notes at the
applicable rate borne by such Global Deposit Notes to the Redemption Date.
(v) Any Global Deposit Note which is to be redeemed only in part
shall be surrendered to the Issuing and Paying Agent, and the Issuing and
Paying Agent shall complete, authenticate and deliver to the Holder of such
Global Deposit Note, without service charge, a new Global Deposit Note or
Global Deposit Notes, of any authorized denomination as requested by such
Holder, in an aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Global Deposit Note so surrendered.
(vi) The Bank, in issuing the Global Deposit Notes may use "CUSIP"
numbers and, if so, the Issuing and Paying Agent shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Global Deposit Notes or as
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<PAGE> 11
contained in any notice of a redemption and that reliance may be placed only
on the other identification numbers printed on the Global Deposit Notes, and
any such redemption shall not be affected by any defect in or omission of such
numbers.
Section 14. Repayment of Global Deposit Notes.
(i) In order for any Global Deposit Note to be repaid in whole or
in part at the option of the Holder thereof, such Global Deposit Note must be
delivered by the Holder thereof, with the form entitled "Option to Elect
Repayment" (set forth in such Global Deposit Note) duly completed, to the
Issuing and Paying Agent at its offices located at the address set forth in
Section 20 hereof, or such other place or places of which the Bank shall from
time to time notify the Holders of the Global Deposit Notes, not more than 60
nor less than 30 days prior to any date fixed for such repayment of such
Global Deposit Notes (the "Optional Repayment Date").
(ii) Upon surrender of any Global Deposit Note for repayment in
accordance with the provisions set forth above, the Global Deposit Note to be
repaid shall, on the Optional Repayment Date, become due and payable, and the
Issuing and Paying Agent shall pay such Global Deposit Note on the Optional
Repayment Date at a price equal to 100% of the principal amount thereof,
together with accrued interest to the Optional Repayment Date.
(iii) If less than the entire principal amount of any Global Deposit
Note is to be repaid, the Holder thereof shall specify the portion thereof
(which shall be in increments of $1,000) which such Holder elects to have
repaid and shall surrender such Global Deposit Note to the Issuing and Paying
Agent, and the Issuing and Paying Agent shall complete, authenticate and
deliver to the Holder of such Global Deposit Note, without service charge, a
new Global Deposit Note or Global Deposit Notes in an aggregate principal
amount equal to and in exchange for the unrepaid portion of the principal of
the Global Deposit Note so surrendered and in such denominations as shall be
specified by such Holder (which shall be $100,000 or an integral multiple of
$1,000 in excess thereof).
Section 15. Acceleration of Maturity. If an Event of Default (as
defined in the applicable Global Deposit Note) with respect to a Deposit Note
issued by the Bank shall occur, then the Holder of the applicable Deposit Note
may declare the principal amount of, and accrued interest and premium, if any,
on such Deposit Note due and payable by written notice to the Bank. Upon such
declaration and notice, such principal amount, accrued interest and premium,
if any, shall become immediately due and payable. The Bank shall promptly
notify, and provide copies of
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<PAGE> 12
any such notice to, the Issuing and Paying Agent, and the Issuing and Paying
Agent shall promptly mail by first-class mail, postage prepaid, copies of such
notice to the Holders of the Deposit Notes upon the occurrence of an Event of
Default or of the curing or waiver of an Event of Default. Any Event of
Default with respect to a Deposit Note may be waived by the Holder thereof.
Section 16. Application of Funds; Return of Unclaimed Funds. Any
monies paid by the Bank and held by the Issuing and Paying Agent in trust for
payment of principal of, premium, if any, or interest on, any Global Deposit
Notes that remain unclaimed for two years following the date on which such
principal, premium or interest shall have become due and payable shall be
returned to the Bank by the Issuing and Paying Agent and the Issuing and
Paying Agent shall inform the Bank as to the specific Global Deposit Notes to
which such monies related, and any Holder shall thereafter look, as an
unsecured general creditor, only to the Bank for the payment thereof and all
liability of the Issuing and Paying Agent with respect to such trust monies
shall thereupon cease. Any funds deposited by the Bank with the Issuing and
Paying Agent for the payment of principal of, premium, if any, or interest on,
the Deposit Note shall be held in trust by the Issuing and Paying Agent for
the payment of principal of, premium, if any, or interest on, the Deposit Note
until paid or returned to the Bank.
Section 17. Cancellation of Unissued Notes. Upon written request
of the Bank, the Issuing and Paying Agent promptly shall cancel and return to
the Bank all unissued Deposit Notes in its possession.
Section 18. Liability. Neither the Issuing and Paying Agent nor
its directors, officers, employees or agents shall be liable to the Bank for
any act or omission hereunder except in the case of gross negligence or
willful misconduct. The duties and obligations of the Issuing and Paying
Agent, its directors, officers and employees shall be determined by the
express provisions of this Agreement and no implied covenants shall be read
into this Agreement against any of them. Notwithstanding any other provision
elsewhere contained in this Agreement, the Issuing and Paying Agent is acting
solely as agent of the Bank and does not assume any obligation or relationship
of trust or agency for or with any Holders. Neither the Issuing and Paying
Agent nor any of its directors, officers or employees shall be required to
ascertain whether any issuance or sale of Deposit Notes (or any amendment or
termination of this Agreement) has been duly authorized (provided that the
Issuing and Paying Agent in good faith has determined that the facsimile or
manual signature of the Authorized Representative or any person who has been
designated by the Authorized Representative in writing to
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<PAGE> 13
the Issuing and Paying Agent reasonably resembles the specimen signatures
filed with the Issuing and Paying Agent) or is in compliance with any other
agreement to which the Bank is a party (whether or not the Issuing and Paying
Agent is also a party to such other agreement), and the Issuing and Paying
Agent and each of its officers and employees shall be entitled to rely upon
any instructions reasonably believed (in accordance with Section 3 hereof) by
the Issuing and Paying Agent and its officers and employees to be given on
behalf of the Bank by an Authorized Representative or by any person who has
been designated by an Authorized Representative in writing to the Issuing and
Paying Agent as a person authorized to give such instructions hereunder,
whether or not in fact given by the Authorized Representative or such
designated person. In no event shall the Issuing and Paying Agent be liable
for special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Issuing and Paying
Agent has been advised of the likelihood of such loss or damage and regardless
of the form of action.
The Issuing and Paying Agent may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Issuing and Paying Agent shall not be responsible
for any willful misconduct or gross negligence on the part of any agent or
attorney appointed with due care by it hereunder. The Issuing and Paying
Agent may consult with counsel of its selection and the advice of such counsel
or any opinion of counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon. The Issuing and Paying Agent shall not
be liable for any action taken, suffered, or omitted to be taken by it in good
faith and reasonably believed by it to be authorized or within the discretion
or rights or powers conferred upon it by this Agreement.
Section 19. Indemnification, Risk of Funds. The Bank shall
indemnify and hold harmless the Issuing and Paying Agent, its directors,
officers, employees and agents from and against all actions, claims, losses,
damages, liabilities, losses and expenses (including reasonable legal fees and
expenses) relating to or arising out of their actions or inactions taken or
omitted to be taken by the Issuing and Paying Agent in good faith in
connection with its performance under this Agreement including, but not
limited to, any actions taken or omitted upon instructions by the Bank (in
accordance with Section 3) or the issuance, delivery, payment or non-payment
of any Deposit Note or interest thereon, or other receipt or other funds for
the payment of the Deposit Notes or interest or premium thereon; provided,
however, that the Issuing and Paying Agent shall be liable for
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<PAGE> 14
any liabilities, losses, claims, damages, costs and expenses (including
reasonable legal fees and expenses) caused by the gross negligence, bad faith
or willful misconduct of its directors, officers, employees or agents. This
indemnity shall survive the termination of this Agreement.
No provision of this Agreement shall require the Issuing and Paying Agent
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
Section 20. Compensation of the Issuing and Paying Agent. The Bank
agrees to pay the compensation of the Issuing and Paying Agent, at such rates
as shall be mutually agreed upon in writing between the Bank and the Issuing
and Paying Agent from time to time. The Bank shall reimburse the Issuing and
Paying Agent for all reasonable out-of-pocket expenses (including reasonable
legal fees and expenses), disbursements and advances incurred or made by the
Issuing and Paying Agent with respect to the Bank in accordance with any
provisions of this Agreement, except any such expense, disbursement or advance
proven to be attributable to the breach of this Agreement or the gross
negligence, bad faith or willful misconduct of the Issuing and Paying Agent,
upon receipt of such invoices as the Bank may reasonably require. The
provisions of this Section 20 shall survive the termination of this Agreement.
Section 21. Notices.
(i) All communications by or on behalf of the Bank relating to the
issuance, transfer, exchange or payment of Deposit Notes or interest thereon
shall be directed to the offices of the Issuing and Paying Agent located at
450 West 33rd Street, New York, New York 10001, Telecopy: (212) 971-3498,
Attention: Global Trust Securities Group, or to such other offices as the
Issuing and Paying Agent shall specify in writing to the Bank. The Bank will
send all Global Deposit Notes to be completed and delivered by the Issuing and
Paying Agent to such offices or such other offices as the Issuing and Paying
Agent shall specify in writing to the Bank.
(ii) All other notices and communications hereunder shall be in
writing and shall be addressed as follows:
(a) if to the Bank:
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<PAGE> 15
Capital One Bank
2980 Fairview Park Drive
Falls Church, Virginia 22042
Attention: Treasurer
Telecopy: [ ]
(b) if to the Issuing and Paying Agent:
Chemical Bank
450 West 33rd Street
New York, New York 10001
Attention: Global Trust Securities Group
Telecopy: (212) 946-3498
Section 22. Resignation or Removal of Issuing and Paying Agent and
Appointment of Successor Issuing and Paying Agent; Merger, Conversion and
Consolidation. The Bank agrees, for the benefit of the Holders from time to
time of the Deposit Notes, that there shall at all times be an Issuing and
Paying Agent hereunder which shall be a bank or trust company organized and
doing business under the laws of the United States or any state thereof
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $10,000,000 and subject to
supervision and examination by federal or state authority, until all the
Global Deposit Notes authenticated and delivered hereunder (A) shall have been
delivered to the Issuing and Paying Agent for cancellation or (B) shall have
become due and payable and funds sufficient to pay the principal of, premium,
if any, and interest on, the Global Deposit Notes shall have been made
available for payment and either paid or returned to the Bank, whichever event
occurs earlier. The foregoing capital and surplus requirements shall not be
applicable if an affiliate of the Bank is appointed as successor Issuing and
Paying Agent.
The Issuing and Paying Agent may resign at any time as such agent
upon written notice to the Bank of such intention on its part, specifying the
date on which its desired resignation shall become effective; provided,
however, that such date shall be not less than 90 days after the giving of
such notice by the Issuing and Paying Agent to the Bank. The Issuing and
Paying Agent may be removed at any time as such agent by the filing with it of
an instrument in writing signed by a duly authorized officer of the Bank and
specifying such removal and the date, which shall be at least 30 calendar days
following receipt of such written notice, upon which it is intended to become
effective. Any such resignation or removal shall take effect on the date of
the appointment by the Bank of a successor issuing and paying agent and the
acceptance of such appointment by such successor issuing and paying agent that
qualifies as such under
15
<PAGE> 16
the first paragraph of this Section. In the event of the resignation
or removal of the Issuing and Paying Agent, if a successor issuing and paying
agent has not been appointed by the Bank within 90 calendar days after the
giving of notice of resignation or within 30 calendar days after receipt of
notice of removal, the Issuing and Paying Agent may, at the expense of the
Bank, petition any court of competent jurisdiction for appointment of a
successor Issuing and Paying Agent. Upon any such resignation or removal, the
Issuing and Paying Agent shall transfer to the successor Issuing and Paying
Agent (or, if none shall have been appointed, to the Bank) all monies held by
the Issuing and Paying Agent on behalf of the Bank in respect of any Global
Deposit Notes, any unissued Global Deposit Notes and all books and records or
copies thereof related to Global Deposit Notes maintained by the Issuing and
Paying Agent, including a copy of the Deposit Note Register. Any resignation
or removal hereunder shall not affect the Issuing and Paying Agent's rights to
the payment of fees earned or charges incurred through the effective date of
such resignation or removal.
Any corporation or bank into which the Issuing and Paying Agent
hereunder may be merged or converted, or any corporation or bank with which
the Issuing and Paying Agent may be consolidated, or any corporation or bank
resulting from any merger, conversion or consolidation to which the Issuing
and Paying Agent shall be a party, or any corporation or bank to which the
Issuing and Paying Agent shall sell or otherwise transfer all or substantially
all of the assets and business of the Issuing and Paying Agent, provided that
it shall be qualified under the first paragraph of this Section, shall be the
successor Issuing and Paying Agent under this Agreement without the execution
or filing of any paper or any further act on the part of any of the parties
hereto.
Section 23. Benefit of Agreement. This Agreement is solely for the
benefit of the parties hereto, Holders of Deposit Notes, and their successors
and assigns, and nothing herein, express or implied, shall give to any other
persons any benefits or any legal or equitable right, remedy or claim under or
by virtue of this Agreement. No party hereto may assign any of its rights or
obligations hereunder except with the prior written consent of all the parties
hereto.
Section 24. Deposit Notes Held by the Issuing and Paying Agent.
The Issuing and Paying Agent, in its individual or other capacity, may become
the owner or pledgee of the Deposit Notes with the same rights it would have
if it were not acting as an issuing and paying agent hereunder.
16
<PAGE> 17
Section 25. Amendment. This Agreement shall not be amended by any
party hereto except in writing executed by the duly authorized officers of all
parties.
Section 26. Governing Law. This Agreement shall be governed by,
construed and enforced in accordance with, the laws of the State of New York
applicable to agreements made and to be performed in such State, without
regard to conflicts of laws principles.
Section 27. Counterparts. This Agreement may be executed by the
parties hereto in any number of counterparts, and by each of the parties
hereto in separate counterparts, and each such counterpart, when so executed
and delivered, shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
17
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on their behalf by their officers thereunto duly authorized, all
as of the day and year first above written.
CAPITAL ONE BANK
By:
------------------------------
Name:
Title:
Chemical Bank
as Issuing and Paying Agent
By:
------------------------------
Name:
Title:
18
<PAGE> 19
A-1
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE
"DEPOSITARY") TO CAPITAL ONE BANK OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED UPON REGISTRATION OF TRANSFER OF, OR
IN EXCHANGE FOR, OR IN LIEU OF, THIS NOTE IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH
NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
THIS DEPOSIT NOTE IS ISSUABLE ONLY IN FULLY REGISTERED FORM IN MINIMUM
DENOMINATIONS OF $100,000 AND INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF.
EACH OWNER OF A BENEFICIAL INTEREST IN THIS DEPOSIT NOTE MUST BE AN
INSTITUTIONAL INVESTOR, AND IS REQUIRED TO HOLD A BENEFICIAL INTEREST IN
$100,000 PRINCIPAL AMOUNT OR ANY INTEGRAL MULTIPLE OF $1,000 IN EXCESS THEREOF
OF THIS DEPOSIT NOTE AT ALL TIMES.
No. FXR-________
CUSIP NO.: _____ REGISTERED
CAPITAL ONE BANK
GLOBAL DEPOSIT NOTE
(Fixed Rate)
ORIGINAL ISSUE DATE: PRINCIPAL AMOUNT:
INTEREST RATE: ____% MATURITY DATE:
INTEREST PAYMENT DATE(S): REGULAR RECORD DATES (FOR NOTES WITH
[ ] At Maturity only MATURITIES OF GREATER THAN ONE YEAR)
[ ] May 15 and November 15 (if other than May 1 or November 1
[ ] Other: prior to each Interest Payment Date):
INITIAL REDEMPTION INITIAL REDEMPTION
DATE: PERCENTAGE:
ANNUAL REDEMPTION HOLDER'S OPTIONAL
<PAGE> 20
PERCENTAGE REDUCTION: REPAYMENT DATE(S):
DAY COUNT CONVENTION
[ ] 30/360 FOR THE PERIOD FROM TO .
[ ] ACTUAL/360 FOR THE PERIOD FROM TO .
[ ] ACTUAL/ACTUAL FOR THE PERIOD FROM TO .
ADDENDUM ATTACHED: ORIGINAL ISSUE DISCOUNT:
[ ] Yes [ ] Yes
[ ] No [ ] No
Total Amount of OID:
DEFAULT RATE: ___% Yield to Maturity:
Initial Accrual Period:
OTHER PROVISIONS:
2
<PAGE> 21
Capital One Bank, a Virginia banking association (the "Bank"), in
consideration of the receipt of a time deposit with the Bank, hereby promises
to pay to CEDE & CO., or registered assigns, the principal sum of ____________
________________________________________________ United States Dollars on the
Maturity Date specified above (except to the extent redeemed or repaid prior
to the Maturity Date) and to pay interest thereon from and including the
Original Issue Date specified above or from and including the most recent
interest payment date on which interest on this Note (or any predecessor Note)
has been paid or duly provided for, semi-annually on May 15 and November 15 of
each year (unless otherwise specified on the face hereof) (each, an "Interest
Payment Date") and at maturity or upon earlier redemption or repayment, if
applicable, commencing on the first Interest Payment Date next succeeding the
Original Issue Date (or, if the Original Issue Date is between a Regular
Record Date (as defined below) and the Interest Payment Date immediately
following such Regular Record Date, on the second Interest Payment Date
following the Original Issue Date), at the Interest Rate per annum specified
above, until the principal hereof is paid or made available for payment, and
(to the extent that the payment of such interest shall be legally enforceable)
at the Default Rate per annum specified above on any overdue principal and
premium, if any, and on any overdue installment of interest. If no Default
Rate is specified above, the Default Rate shall be the Interest Rate on this
Note specified above. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will be paid to the person in whose
name this Note (or any predecessor Note) is registered at the close of
business on the Regular Record Date, which shall be May 1 and November 1
(whether or not a Business Day (as defined below)), as the case may be, next
preceding the applicable Interest Payment Date (unless otherwise specified on
the face hereof) (each, a "Regular Record Date"); provided, however, that
interest payable at maturity or upon earlier redemption or repayment, if
applicable, will be payable to the person to whom principal shall be payable.
Any such interest not so punctually paid or duly provided for shall forthwith
cease to be payable to the holder as of the close of business on such Regular
Record Date, and may either be paid to the person in whose name this Note (or
any predecessor Note) is registered at the close of business on a special
record date for the payment of such defaulted interest (the "Special Record
Date") to be fixed
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<PAGE> 22
by the Bank, notice of which shall be given to the holders of Notes not less
than 10 calendar days prior to such Special Record Date, or be paid at any
time in any other lawful manner.
Payment of principal of, premium, if any, and interest on, this Note will
be made in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts. The
Bank will at all times appoint and maintain an issuing and paying agent (the
"Issuing and Paying Agent," which term shall include any successor Issuing and
Paying Agent), authorized by the Bank to pay principal of, premium, if any,
and interest on, this Note on behalf of the Bank pursuant to an issuing and
paying agency agreement (the "Issuing and Paying Agency Agreement") and having
an office or agency (the "Issuing and Paying Agent Office") in The City of New
York (the "Place of Payment"), where this Note may be presented or surrendered
for payment and where notices, designations or requests in respect of payments
with respect to this Note may be served. The Bank has initially appointed
Chemical Bank as the Issuing and Paying Agent, with the Issuing and Paying
Agent Office currently located at 450 West 33rd Street, New York, New York
10001, Attention: Global Trust Securities Group. The Bank may remove the
Issuing and Paying Agent pursuant to the terms of the Issuing and Paying
Agency Agreement and may appoint a successor Issuing and Paying Agent.
THIS NOTE IS AN OBLIGATION SOLELY OF THE BANK AND WILL NOT BE AN
OBLIGATION OF, OR OTHERWISE GUARANTEED BY, CAPITAL ONE FINANCIAL CORPORATION
OR ANY OF ITS AFFILIATES OTHER THAN THE BANK.
THE DEPOSIT EVIDENCED BY THIS NOTE RANKS PARI PASSU WITH ALL OTHER
UNSECURED DEPOSIT LIABILITIES OF THE BANK. THE DEPOSIT EVIDENCED BY THIS NOTE
MAY NOT BE WITHDRAWN PRIOR TO ITS MATURITY, EXCEPT AS MAY BE REQUIRED BY
APPLICABLE LAW. THE DEPOSIT REPRESENTED BY THIS NOTE WILL NOT BE
AUTOMATICALLY RENEWED AT MATURITY, AND NO ADDITIONS MAY BE MADE TO SUCH
DEPOSIT AT ANY TIME.
BY ACCEPTING THE DEPOSIT EVIDENCED BY THIS NOTE, THE BANK HEREBY
REPRESENTS THAT AS OF THE ORIGINAL ISSUE DATE IT IS "WELL CAPITALIZED" AS SUCH
TERM IS DEFINED IN 12 C.F.R. 337, OR ANY AMENDMENTS OR REVISIONS TO SUCH
REGULATION, AND THAT IT MEETS THE REQUIREMENTS OF 12 C.F.R. 330.12(b),
INCLUDING EACH APPLICABLE
4
<PAGE> 23
CAPITAL STANDARD REFERRED TO UNDER 12 C.F.R. 330.12(b)(1), AND DEPOSIT
INSURANCE ON A "PASS THROUGH" BASIS IS AVAILABLE FOR CERTAIN EMPLOYEE BENEFIT
PLANS PURCHASING THE DEPOSIT EVIDENCED BY THIS NOTE SUBJECT TO THE LIMITATIONS
AND RESTRICTIONS (INCLUDING ANY APPLICABLE AGGREGATION RULES AND RECORDKEEPING
REQUIREMENTS) SET FORTH UNDER 12 C.F.R. PART 330.
Payment of principal of, premium, if any, and interest on, this Note due
at maturity or upon earlier redemption or repayment, if applicable, will be
made in immediately available funds upon presentation and surrender of this
Note to the Issuing and Paying Agent at the Issuing and Paying Agent Office;
provided that this Note is presented to the Issuing and Paying Agent in time
for the Issuing and Paying Agent to make such payment in accordance with its
normal procedures. Payments of interest on this Note (other than at maturity
or upon earlier redemption or repayment) will be made by wire transfer to such
account as has been appropriately designated to the Issuing and Paying Agent
by the person entitled to such payments.
Reference herein to "this Note", "hereof", "herein" and comparable terms
shall include an Addendum hereto if an Addendum is specified above.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have
the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Bank has caused this Note to be duly executed.
CAPITAL ONE BANK
By:
-----------------------------------
Authorized Signatory
Dated:
5
<PAGE> 24
ISSUING AND PAYING AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the Issuing and Paying Agency
Agreement.
CHEMICAL BANK
as Issuing and Paying Agent
By:
---------------------
Authorized Signatory
6
<PAGE> 25
[Reverse]
This Note is one of a duly authorized issue of Deposit Notes of the Bank
due from 30 days to 30 years from date of issue (the "Notes").
Payments of interest hereon will include interest accrued to but
excluding the relevant Interest Payment Date or Maturity Date or date of
earlier redemption or repayment, as the case may be. Unless otherwise
specified on the face hereof, interest on the Notes with maturities of greater
than one year will be computed on the basis of a 360-day year of twelve 30-day
months. Unless otherwise specified on the face hereof, interest on Notes
with maturities of one year or less will be computed on the basis of the
actual number of days in the year divided by 360 and will be payable only at
maturity to the person to whom principal shall be payable.
Any provision contained herein with respect to the calculation of the
rate of interest applicable to this Note, its Interest Payment Dates or any
other matter relating hereto may be modified as specified in an Addendum
relating hereto if so specified on the face hereof.
If any Interest Payment Date, Maturity Date or date of earlier redemption
or repayment of this Note falls on a day which is not a Business Day, the
related payment of principal of, premium, if any, or interest on, this Note
shall be made on the next succeeding Business Day with the same force and
effect as if made on the date such payment were due, and no interest shall
accrue on the amount so payable for the period from and after such Interest
Payment Date, Maturity Date or date of earlier redemption or repayment, as the
case may be. "Business Day" means, unless otherwise specified on the face
hereof, any day that is not a Saturday or Sunday and that in The City of New
York or in the city in which the Bank is headquartered is not a day on which
banking institutions are authorized or required by law, regulation or
executive order to close.
This Note will not be subject to any sinking fund. If so provided on the
face of this Note, this Note may be redeemed by the Bank either in whole or in
part on and after the Initial Redemption Date, if any, specified on the face
hereof. If no
7
<PAGE> 26
Initial Redemption Date is specified on the face hereof, this Note may not be
redeemed prior to the Maturity Date. On and after the Initial Redemption
Date, if any, this Note may be redeemed in increments of $1,000 (provided that
any remaining principal amount hereof shall be at least $100,000) at the
option of the Bank at the applicable Redemption Price (as defined below),
together with unpaid interest accrued hereon at the applicable rate borne by
this Note to the date of redemption (each such date, a "Redemption Date"), on
written notice given not more than 60 nor less than 30 calendar days prior to
the Redemption Date to the registered holder hereof. Whenever less than all
the Notes at any time outstanding are to be redeemed, the terms of the Notes
to be so redeemed shall be selected by the Bank. If less than all the Notes
with identical terms at any time outstanding are to be redeemed, the Notes to
be so redeemed shall be selected by the Issuing and Paying Agent by lot or in
any usual manner approved by it. In the event of redemption of this Note in
part only, a new Note for the unredeemed portion hereof shall be issued in the
name of the holder hereof upon the surrender hereof.
The "Redemption Price" shall initially be the Initial Redemption
Percentage specified on the face hereof of the principal amount of this Note
to be redeemed and shall decline at each anniversary of the Initial Redemption
Date specified on the face hereof by the Annual Redemption Percentage
Reduction, if any, specified on the face hereof, of the principal amount to be
redeemed until the Redemption Price is 100% of such principal amount.
This Note may be subject to repayment at the option of the holder hereof
in accordance with the terms hereof on any Holder's Optional Repayment
Date(s), if any, specified on the face hereof. If no Holder's Optional
Repayment Date is specified on the face hereof, this Note will not be
repayable at the option of the holder hereof prior to maturity. On any
Holder's Optional Repayment Date, this Note will be repayable in whole or in
part in increments of $1,000 (provided that any remaining principal amount
hereof will be at least $100,000) at the option of the holder hereof at a
repayment price equal to 100% of the principal amount to be repaid, together
with accrued and unpaid interest hereon payable to the date of repayment. For
this Note to be repaid in whole or in part at the option of the holder hereof
on a Holder's Optional Repayment Date, this Note must be delivered,
8
<PAGE> 27
with the form entitled "Option to Elect Repayment" attached hereto duly
completed, to the Issuing and Paying Agent at its offices located at 450 West
33rd Street, New York, New York 10001, Attention: Global Trust Securities
Group, or at such other address which the Bank shall from time to time notify
the holders of the Notes, not more than 60 nor less than 30 calendar days
prior to such Holder's Optional Repayment Date. In the event of repayment of
this Note in part only, a new Note for the unrepaid portion hereof shall be
issued in the name of the holder hereof upon the surrender hereof. Exercise
of such repayment option by the holder hereof shall be irrevocable.
If this Note is an Original Issue Discount Note and if an Event of
Default with respect to this Note shall have occurred and be continuing, the
Default Amount (as defined hereafter) of this Note may be declared due and
payable in the manner and with the effect provided herein. The "Default
Amount" shall be equal to the adjusted issue price as of the first day of the
accrual period as determined under Final Treasury Regulation Section
1.1275-1(b) (or successor regulation) under the United States Internal Revenue
Code of 1986, as amended, in which the date of acceleration occurs increased
by the daily portion of the original issue discount for each day in such
accrual period ending on the date of acceleration, as determined under Final
Treasury Regulation Section 1.1272-1(b) (or successor regulation) under the
United States Internal Revenue Code of 1986, as amended. Upon payment of (i)
the principal, or premium, if any, so declared due and payable and (ii)
interest on any overdue principal and overdue interest or premium, if any (in
each case to the extent that the payment of such interest shall be legally
enforceable), all of the Bank's obligations in respect of the payment of
principal of, premium, if any, and interest on, this Note shall terminate.
In case any Note shall at any time become mutilated, destroyed, lost or
stolen, and such Note or evidence of the loss, theft or destruction thereof
satisfactory to the Bank and the Issuing and Paying Agent and such other
documents or proof as may be required by the Bank and the Issuing and Paying
Agent shall be delivered to the Issuing and Paying Agent, the Bank shall issue
a new Note, of like tenor and principal amount, having a serial number not
contemporaneously outstanding, in exchange and substitution for the mutilated
Note or in lieu of the Note destroyed, lost or stolen but, in the case of any
destroyed, lost
9
<PAGE> 28
or stolen Note, only upon receipt of evidence satisfactory to the Bank and the
Issuing and Paying Agent that such Note was destroyed, stolen or lost, and, if
required, upon receipt of indemnity satisfactory to the Bank and the Issuing
and Paying Agent. Upon the issuance of any substituted Note, the Bank and the
Issuing and Paying Agent may require the payment of a sum sufficient to cover
all expenses and reasonable charges connected with the preparation and
delivery of a new Note. If any Note which has matured or has been redeemed or
repaid or is about to mature or to be redeemed or repaid shall become
mutilated, destroyed, lost or stolen, the Bank may, instead of issuing a
substitute Note, pay or authorize the payment of the same (without surrender
thereof except in the case of a mutilated Note) upon compliance by the holder
with the provisions of this paragraph.
No recourse shall be had for the payment of principal of, premium, if
any, or interest on, this Note for any claim based hereon, or otherwise in
respect hereof, against any shareholder, employee, agent, officer or director,
as such, past, present or future, of the Bank or of any successor corporation,
banking association or other legal entity (collectively, "corporation"),
either directly or through the Bank or any successor corporation, whether by
virtue of any constitution, statute or rule of law or by the enforcement of
any assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
The occurrence of any of the following events shall constitute an "Event
of Default" with respect to this Note: (i) default in the payment of any
interest with respect to any of the Notes issued by the Bank when due, which
continues for 30 calendar days; (ii) default in the payment of any principal
of, or premium, if any, on, any of the Notes issued by the Bank when due;
(iii) the entry by a court having jurisdiction in the premises of (a) a decree
or order for relief in respect of the Bank in an involuntary case or
proceeding under any applicable United States federal or state bankruptcy,
insolvency, reorganization or other similar law or (b) a decree or order
appointing a conservator, receiver, liquidator, assignee, trustee,
sequestrator or any other similar official of the Bank, or of substantially
all of the property of the Bank, or ordering the winding up or liquidation of
the affairs of the Bank, and the
10
<PAGE> 29
continuance of any such decree or order for relief or any such other decree or
order unstayed and in effect for a period of 60 consecutive days; or (iv) the
commencement by the Bank of a voluntary case or proceeding under any
applicable United States federal or state bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to be
adjudicated as bankrupt or insolvent, or the consent by the Bank to the entry
of a decree or order for relief in an involuntary case or proceeding under any
applicable United States federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy
or insolvency case or proceeding, or the filing by the Bank of a petition or
answer or consent seeking reorganization or relief under any applicable United
States federal or state bankruptcy, insolvency, reorganization or similar law,
or the consent by the Bank to the filing of such petition or to the
appointment of or taking possession by a custodian, conservator, receiver,
liquidator, assignee, trustee, sequestrator or similar official of the Bank or
of substantially all of the property of the Bank, or the making by the Bank of
an assignment for the benefit of creditors, or the taking of corporate action
by the Bank in furtherance of any such action. If an Event of Default shall
occur and be continuing, the holder of this Note may declare the principal
amount of, accrued interest and premium, if any, on, this Note due and payable
immediately by written notice to the Bank. Upon such declaration and notice,
such principal amount, accrued interest and premium, if any, shall become
immediately due and payable. Any Event of Default with respect to this Note
may be waived by the holder hereof.
The Issuing and Paying Agency Agreement provides that the Bank will
promptly notify, and provide copies of any such notice to, the Issuing and
Paying Agent, and the Issuing and Paying Agent will promptly mail by
first-class mail, postage prepaid, copies of such notice to the holders of the
Notes, upon the occurrence of an Event of Default or of the curing or waiver
of an Event of Default.
Nothing contained herein shall prevent any consolidation or merger of the
Bank with any other corporation or successive consolidations or mergers in
which the Bank or its successor or successors shall be a party or parties, or
shall prevent any sale, conveyance, transfer or lease of the property of the
Bank as an entirety or substantially as an entirety to any other
11
<PAGE> 30
corporation authorized to acquire and operate the same; provided, however (and
the Bank hereby covenants and agrees) that any such consolidation, merger,
sale or conveyance shall be upon the condition that: (i) immediately after
such consolidation, merger, sale or conveyance the corporation (whether the
Bank or such other corporation) formed by or surviving any such consolidation
or merger, or the corporation to which such sale or conveyance shall have been
made, shall not be in default in the performance or observance of any of the
terms, covenants and conditions of this Note to be observed or performed by
the Bank; and (ii) the corporation (if other than the Bank) formed by or
surviving any such consolidation or merger, or the corporation to which such
sale or conveyance shall have been made, shall be organized under the laws of
the United States of America or any state thereof or the District of Columbia
and shall expressly assume the due and punctual payment of the principal of,
premium, if any, and interest on, this Note. In case of any such
consolidation, merger, sale, conveyance, transfer or lease, and upon the
assumption by the successor corporation of the due and punctual performance of
all of the covenants in this Note to be performed or observed by the Bank,
such successor corporation shall succeed to and be substituted for the Bank
with the same effect as if it had been named in this Note as the Bank and
thereafter the predecessor corporation shall be relieved of all obligations
and covenants in this Note and may be liquidated and dissolved.
Any action by the holder of this Note shall bind all future holders of
this Note, and of any Note issued in exchange or substitution herefor or in
place hereof, in respect of anything done or permitted by the Bank or by the
Issuing and Paying Agent in pursuance of such action.
The Issuing and Paying Agent shall maintain at its offices a register
(the register maintained in such office or any other office or agency of the
Issuing and Paying Agent in The City of New York, herein referred to as the
"Note Register") in which, subject to such reasonable regulations as it may
prescribe, the Issuing and Paying Agent shall provide for the registration of
the Notes and of transfers of the Notes (in such capacity, the "Notes
Registrar").
The transfer of this Note is registrable in the Note Register, upon
surrender of this Note for registration of
12
<PAGE> 31
transfer at the office or agency of the Issuing and Paying Agent in the Place
of Payment, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Bank and the Issuing and Paying Agent
duly executed by, the holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Notes of like tenor, of authorized
denominations and for the same aggregate principal amount, will be issued to
the designated transferee or transferees.
No provision of this Note shall alter or impair the obligation of the
Bank, which is absolute and unconditional, to pay principal of, premium, if
any, and interest on, this Note in U.S. dollars at the times, places and rate
herein prescribed in accordance with its terms.
No service charge shall be made to a holder of this Note for any transfer
or exchange of this Note, but the Bank may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in
connection therewith.
Beneficial interests represented by this Note are exchangeable for
definitive Notes in registered form, of like tenor and of an equal aggregate
principal amount, only if (x) The Depository Trust Company, as Depositary (the
"Depositary") notifies the Bank that it is unwilling or unable to continue as
Depositary for this Note or if at any time the Depositary ceases to be a
clearing agency registered under the Securities Exchange Act of 1934, as
amended, and a successor depositary is not appointed by the Bank within 60
days, or (y) the Bank in its sole discretion determines not to have such
beneficial interests represented by this Note. Any Note representing such
beneficial interests that is exchangeable pursuant to the preceding sentence
shall be exchangeable in whole for definitive Notes in registered form, of
like tenor and of an equal aggregate principal amount, in minimum
denominations of $100,000 and integral multiples of $1,000 in excess thereof.
Such definitive Notes shall be registered in the name or names of such person
or persons as the Depositary shall instruct the Issuing and Paying Agent.
Prior to due presentment of this Note for registration of transfer, the
Bank, the Issuing and Paying Agent or any agent of the Bank or the Issuing and
Paying Agent may treat the holder in whose name this Note is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and
neither the
13
<PAGE> 32
Bank, the Issuing and Paying Agent nor any such agent shall be affected by
notice to the contrary except as required by applicable law.
All notices to the Bank under this Note shall be in writing and addressed
to the Bank, 2980 Fairview Park Drive, Falls Church, Virginia 22042,
Attention: Treasurer, or to such other address of the Bank as the Bank may
notify the holders of the Notes.
This Note shall be governed by, and construed in accordance with, the
laws of the State of New York, without regard to conflicts of laws principles
and all applicable federal laws and regulations.
14
<PAGE> 33
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
the within Note, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT - Custodian
-------------- ---------
(Cust) (Minor)
under Uniform Gifts to Minors Act
----------------------------------
(State)
Additional abbreviations may also be used
though not in the above list.
15
<PAGE> 34
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto _______________________________________________
______________________________________________________________________________
PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
____________________________
/___________________________/
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name and address,
including postal zip code, of assignee)
the within Note and all rights thereunder, and hereby
irrevocably constitutes and appoints__________________________________________
______________________________________________________________________________
______________________________________________________________________________
to transfer said Note on the books of the Issuing and Paying
Agent, with full power of substitution in the premises.
Dated: ---------------------------------
------------------ NOTICE: The signature to this
assignment must correspond with
the name as written upon the face
of the within Note in every
particular, without alteration or
enlargement or any change
whatsoever.
- --------------------------------
Signature Guarantee
16
<PAGE> 35
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the Bank to
repay this Note (or portion hereof specified below) pursuant to its terms at a
price equal to 100% of the principal amount hereof to be repaid, together with
accrued and unpaid interest hereon, payable to the date of repayment, to the
undersigned, at ______________________________________________________________
_____________________________________________________________________________.
(Please print or typewrite name and address of the undersigned)
For this Note to be repaid, the undersigned must give to the Issuing and
Paying Agent at its offices located at 450 West 33rd Street, New York, New
York 10001, Attention: Global Trust Securities Group, or at such other place
or places of which the Bank shall from time to time notify the holders of the
Notes, not more than 60 days nor less than 30 days prior to the date of
repayment, with this "Option to Elect Repayment" form duly completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be increments of $1,000) which the
holder elects to have repaid and specify the denomination or denominations
(which shall be $100,000 or an integral multiple of $1,000 in excess thereof)
of the Notes to be issued to the holder for the portion of this Note not being
repaid (in the absence of any such specification, one such Note will be issued
for the portion not being repaid):
$ ------------------------------
------------------------------ NOTICE: The signature on this
Dated: "Option to Elect Repayment" form must
------------------------ correspond with the name as written upon
the face of the within Note in every
particular, without alteration or
enlargement or any change whatsoever.
- --------------------------------
Signature Guarantee
17
<PAGE> 36
A-2
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (THE
"DEPOSITARY") TO CAPITAL ONE BANK OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED UPON REGISTRATION OF TRANSFER OF, OR
IN EXCHANGE FOR, OR IN LIEU OF, THIS NOTE IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH
NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
THIS DEPOSIT NOTE IS ISSUABLE ONLY IN FULLY REGISTERED FORM IN MINIMUM
DENOMINATIONS OF $100,000 AND INTEGRAL MULTIPLES OF $1,000 IN EXCESS THEREOF.
EACH OWNER OF A BENEFICIAL INTEREST IN THIS DEPOSIT NOTE MUST BE AN
INSTITUTIONAL INVESTOR, AND IS REQUIRED TO HOLD A BENEFICIAL INTEREST IN
$100,000 PRINCIPAL AMOUNT OR ANY INTEGRAL MULTIPLE OF $1,000 IN EXCESS THEREOF
OF THIS DEPOSIT NOTE AT ALL TIMES.
No. FLR-_____ REGISTERED
CUSIP NO.: _____
CAPITAL ONE BANK
GLOBAL DEPOSIT NOTE
(Floating Rate)
ORIGINAL ISSUE DATE: PRINCIPAL AMOUNT:
INITIAL INTEREST RATE: _____% MATURITY DATE:
INTEREST RATE INDEX MATURITY:
BASIS OR BASES:
IF LIBOR: REGULAR RECORD
[ ] Libor Telerate DATES (if other than the 15th day
[ ] Libor Reuters prior to each Interest Payment
Date):
INDEX CURRENCY:
<PAGE> 37
SPREAD (PLUS OR MINUS) MINIMUM INTEREST RATE:
AND/OR SPREAD MULTIPLIER:
INTEREST PAYMENT PERIOD:
MAXIMUM INTEREST RATE:
INTEREST RESET PERIOD:
INTEREST PAYMENT DATES:
CALCULATION AGENT:
INITIAL INTEREST RESET DATE:
ANNUAL REDEMPTION
INTEREST RESET DATES: PERCENTAGE REDUCTION:
INITIAL REDEMPTION DATE: HOLDER'S OPTIONAL
REPAYMENT DATE(S):
INITIAL REDEMPTION
PERCENTAGE: DAY COUNT CONVENTION
[ ] 30/360 for the period
INTEREST CALCULATION: from __________ to __________.
[ ] Regular Floating Rate [ ] Actual/360 for the
Note period from _______ to _______.
[ ] Floating Rate/Fixed Rate [ ] Actual/Actual for the
Note period from __________ to
Fixed Rate Commencement Date: ____________.
Fixed Interest Rate:
[ ] Inverse Floating Rate ORIGINAL ISSUE DISCOUNT
Note [ ] Yes
Fixed Interest Rate: [ ] No
ADDENDUM ATTACHED: Total Amount of OID:
[ ] Yes Yield to Maturity:
[ ] No Initial Accrual Period:
OTHER PROVISIONS: DEFAULT RATE: ______%
2
<PAGE> 38
Capital One Bank, a Virginia banking association (the "Bank"), in
consideration of the receipt of a time deposit with the Bank, hereby promises
to pay to CEDE & CO., or registered assigns, the principal sum of ___________
___________________________________________________________ United States
Dollars on the Maturity Date specified above (except to the extent redeemed or
repaid prior to the Maturity Date) and to pay interest thereon from and
including the Original Issue Date specified above or from and including the
most recent interest payment date to which interest on this Note (or any
predecessor Note) has been paid or duly provided for (each, an "Interest
Payment Date"), on the Interest Payment Dates specified above and at maturity
or upon earlier redemption or repayment, if applicable, commencing on the
first Interest Payment Date next succeeding the Original Issue Date (or, if
the Original Issue Date is between a Regular Record Date (as defined below)
and the Interest Payment Date immediately following such Regular Record Date,
on the second Interest Payment Date following the Original Issue Date), at a
rate per annum equal to the Initial Interest Rate specified above until the
Initial Interest Reset Date specified above and thereafter at a rate per annum
determined in accordance with the provisions hereof and any Addendum relating
hereto depending upon the Interest Rate Basis or Bases, if any, and such other
terms specified above, until the principal hereof is paid or made available
for payment, and (to the extent that the payment of such interest shall be
legally enforceable) at the Default Rate per annum specified above on any
overdue principal and premium, if any, and on any overdue installment of
interest. If no Default Rate is specified above, the Default Rate shall be
the Interest Rate on this Note specified above. The interest so payable, and
punctually paid or duly provided for, on any Interest Payment Date will be
paid to the person in whose name this Note (or any predecessor Note) is
registered at the close of business on the Regular Record Date, which shall be
the 15th calendar day (whether or not a Business Day(as defined below)) prior
to such Interest Payment Date (unless otherwise specified on the face hereof)
(each, a "Regular Record Date"); provided, however, that interest payable at
maturity or upon earlier redemption or repayment, if applicable, will be
payable to the person to whom principal shall be payable. Any such interest
not so punctually paid or duly provided for shall forthwith cease to be
payable to the holder as of the close of business on such Regular Record Date
and may either be paid to the person in whose name this Note (or any
predecessor Note) is registered at the
3
<PAGE> 39
close of business on a special record date for the payment of such defaulted
interest (the "Special Record Date") to be fixed by the Bank, notice of which
shall be given to the holders of Notes not less than 10 calendar days prior to
such Special Record Date, or be paid at any time in any other lawful manner.
Payment of principal of, premium, if any, and interest on, this Note will
be made in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts. The
Bank will at all times appoint and maintain an issuing and paying agent (the
"Issuing and Paying Agent," which term shall include any successor Issuing and
Paying Agent), authorized by the Bank to pay principal of, premium, if any,
and interest on, this Note on behalf of the Bank and having an office or
agency (the "Issuing and Paying Agent Office") in The City of New York (the
"Place of Payment"), where this Note may be presented or surrendered for
payment and where notices, designations or requests in respect of payments
with respect to this Note may be served. The Bank has initially appointed
Chemical Bank as the Issuing and Paying Agent, with the Issuing and Paying
Agent Office currently located at 450 West 33rd Street, New York, New York
10001, Attention: Global Trust Securities Group. The Bank may remove the
Issuing and Paying Agent pursuant to the terms of the Issuing and Paying
Agency Agreement, and appoint a successor Issuing and Paying Agent.
THIS NOTE IS AN OBLIGATION SOLELY OF THE BANK AND WILL NOT BE AN
OBLIGATION OF, OR OTHERWISE GUARANTEED BY, CAPITAL ONE FINANCIAL CORPORATION
OR ANY OF ITS AFFILIATES OTHER THAN THE BANK.
THE DEPOSIT EVIDENCED BY THIS NOTE RANKS PARI PASSU WITH ALL OTHER
UNSECURED DEPOSIT LIABILITIES OF THE BANK. THE DEPOSIT EVIDENCED BY THIS NOTE
MAY NOT BE WITHDRAWN PRIOR TO ITS MATURITY, EXCEPT AS MAY BE REQUIRED BY
APPLICABLE LAW. THE DEPOSIT REPRESENTED BY THIS NOTE WILL NOT BE
AUTOMATICALLY RENEWED AT MATURITY, AND NO ADDITIONS MAY BE MADE TO SUCH
DEPOSIT AT ANY TIME.
BY ACCEPTING THE DEPOSIT EVIDENCED BY THIS NOTE, THE BANK HEREBY
REPRESENTS THAT AS OF THE ORIGINAL ISSUE DATE IT IS "WELL CAPITALIZED" AS SUCH
TERM IS DEFINED IN 12 C.F.R. 337, OR ANY AMENDMENTS OR REVISIONS TO SUCH
REGULATION, AND THAT IT MEETS THE REQUIREMENTS OF 12 C.F.R. 330.12(b),
INCLUDING EACH APPLICABLE
4
<PAGE> 40
CAPITAL STANDARD REFERRED TO UNDER 12 C.F.R. 330.12(b)(1), AND DEPOSIT
INSURANCE ON A "PASS THROUGH" BASIS IS AVAILABLE FOR CERTAIN EMPLOYEE BENEFIT
PLANS PURCHASING THE DEPOSIT EVIDENCED BY THIS NOTE SUBJECT TO THE LIMITATIONS
AND RESTRICTIONS (INCLUDING ANY APPLICABLE AGGREGATION RULES AND RECORDKEEPING
REQUIREMENTS) SET FORTH UNDER 12 C.F.R. PART 330.
Payment of principal of, premium, if any, and interest on, this Note due
at maturity or upon earlier redemption or repayment, if applicable, will be
made in immediately available funds upon presentation and surrender of this
Note to the Issuing and Paying Agent at the Issuing and Paying Agent Office;
provided that this Note is presented to the Issuing and Paying Agent in time
for the Issuing and Paying Agent to make such payment in accordance with its
normal procedures. Payments of interest on this Note (other than at maturity
or upon earlier redemption or repayment) will be made by wire transfer to such
account as has been appropriately designated to the Issuing and Paying Agent
by the person entitled to such payments.
Reference herein to "this Note", "hereof", "herein" and comparable terms
shall include an Addendum hereto if an Addendum is specified above.
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions shall for all purposes have
the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Bank has caused this Note to be duly executed.
CAPITAL ONE BANK
By:
-----------------------------------
Authorized Signatory
Dated:
5
<PAGE> 41
ISSUING AND PAYING AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the Issuing and Paying Agency
Agreement.
CHEMICAL BANK
as Issuing and Paying Agent
By:
-----------------------------
Authorized Signatory
6
<PAGE> 42
[Reverse]
This Note is one of a duly authorized issue of Deposit Notes of the Bank
due from 30 days to 30 years from date of issue (the "Notes").
If any Interest Payment Date (other than an Interest Payment Date at the
Maturity Date or date of earlier redemption or repayment of this Note) would
otherwise fall on a day that is not a Business Day, such Interest Payment Date
shall be postponed to the next succeeding day that is a Business Day, except
that if an Interest Rate Basis is LIBOR, as indicated on the face hereof, and
such next Business Day falls in the next succeeding calendar month, such
Interest Payment Date shall be the immediately preceding day that is a
Business Day. Except as provided above, interest payments will be made on the
Interest Payment Dates shown on the face hereof. If the Maturity Date or date
of earlier redemption or repayment of this Note falls on a day which is not a
Business Day, the related payment of principal of, premium, if any, and
interest on, this Note will be made on the next succeeding Business Day with
the same force and effect as if made on the date such payment was due, and no
interest shall accrue on the amount so payable for the period from and after
such Maturity Date or date of earlier redemption or repayment, as the case may
be.
This Note will not be subject to any sinking fund. If so provided on the
face of this Note, this Note may be redeemed by the Bank either in whole or in
part on and after the Initial Redemption Date, if any, specified on the face
hereof. If no Initial Redemption Date is specified on the face hereof, this
Note may not be redeemed prior to the Maturity Date. On and after the Initial
Redemption Date, if any, this Note may be redeemed in increments of $1,000
(provided that any remaining principal amount hereof shall be at least
$100,000) at the option of the Bank at the applicable Redemption Price (as
defined below), together with unpaid interest accrued hereon at the applicable
rate borne by this Note to the date of redemption (each such date, a
"Redemption Date"), on written notice given not more than 60 nor less than 30
calendar days prior to the Redemption Date to the registered holder hereof.
Whenever less than all the Notes at any time outstanding are to be redeemed,
7
<PAGE> 43
the terms of the Notes to be so redeemed shall be selected by the Bank. If
less than all the Notes with identical terms at any time outstanding are to be
redeemed, the Notes to be so redeemed shall be selected by the Issuing and
Paying Agent by lot or in any usual manner approved by it. In the event of
redemption of this Note in part only, a new Note for the unredeemed portion
hereof shall be issued in the name of the holder hereof upon the surrender
hereof.
The "Redemption Price" shall initially be the Initial Redemption
Percentage specified on the face hereof of the principal amount of this Note
to be redeemed and shall decline at each anniversary of the Initial Redemption
Date specified on the face hereof by the Annual Redemption Percentage
Reduction, if any, specified on the face hereof, of the principal amount to be
redeemed until the Redemption Price is 100% of such principal amount.
This Note may be subject to repayment at the option of the holder hereof
in accordance with the terms hereof on any Holder's Optional Repayment
Date(s), if any, specified on the face hereof. If no Holder's Optional
Repayment Date is specified on the face hereof, this Note will not be
repayable at the option of the holder hereof prior to maturity. On any
Holder's Optional Repayment Date, this Note will be repayable in whole or in
part in increments of $1,000 (provided that any remaining principal amount
hereof will be at least $100,000) at the option of the holder hereof at a
repayment price equal to 100% of the principal amount to be repaid, together
with accrued and unpaid interest hereon payable to the date of repayment. For
this Note to be repaid in whole or in part at the option of the holder hereof
on a Holder's Optional Repayment Date, this Note must be delivered, with the
form entitled "Option to Elect Repayment" attached hereto duly completed, to
the Issuing and Paying Agent at its offices located at 450 West 33rd Street,
New York, New York 10001, Attention: Global Trust Securities Group, or at such
other address which the Bank shall from time to time notify the holders of the
Notes, not more than 60 nor less than 30 calendar days prior to such Holder's
Optional Repayment Date. In the event of repayment of this Note in part only,
a new Note for the unrepaid portion hereof shall be issued in the name of the
holder hereof upon the surrender hereof. Exercise of such repayment option by
the holder hereof shall be irrevocable.
8
<PAGE> 44
The interest rate borne by this Note shall be determined as follows:
1. If this Note is designated as a Regular Floating Rate Note on the face
hereof or if no designation is made for Interest Calculation on the face
hereof, then, except as described below or in an Addendum hereto, this Note
shall bear interest at the rate determined by reference to the applicable
Interest Rate Basis or Bases shown on the face hereof (i) plus or minus the
applicable Spread, if any, and/or (ii) multiplied by the applicable Spread
Multiplier, if any, specified and applied in the manner described on the face
hereof. Commencing on the Initial Interest Reset Date, the rate at which
interest on this Note is payable shall be reset as of each Interest Reset Date
specified on the face hereof; provided, however, that the interest rate in
effect for the period from the Original Issue Date to the Initial Interest
Reset Date will be the Initial Interest Rate.
2. If this Note is designated as a Floating Rate/Fixed Rate Note
on the face hereof, then, except as described below or in an Addendum
hereto, this Note shall bear interest at the rate determined by reference
to the applicable Interest Rate Basis or Bases shown on the face hereof
(i) plus or minus the applicable Spread, if any, and/or (ii) multiplied
by the applicable Spread Multiplier, if any, specified and applied in the
manner described on the face hereof. Commencing on the Initial Interest
Reset Date, the rate at which interest on this Note is payable shall be
reset as of each Interest Reset Date specified on the face hereof;
provided, however, that (i) the interest rate in effect for the period
from the Original Issue Date to the Initial Interest Reset Date shall be
the Initial Interest Rate; and (ii) the interest rate in effect
commencing on, and including, the Fixed Rate Commencement Date to the
Maturity Date or date of earlier redemption or repayment shall be the
Fixed Interest Rate, if such a rate is specified on the face hereof, or
if no such Fixed Interest Rate is so specified, the interest rate in
effect hereon on the Business Day immediately preceding the Fixed Rate
Commencement Date.
9
<PAGE> 45
3. If this Note is designated as an Inverse Floating Rate Note on
the face hereof, then, except as described below or in an Addendum
hereto, this Note shall bear interest equal to the Fixed Interest Rate
indicated on the face hereof minus the rate determined by reference to
the applicable Interest Rate Basis or Bases shown on the face hereof (i)
plus or minus the applicable Spread, if any, and/or (ii) multiplied by
the applicable Spread Multiplier, if any, specified and applied in the
manner described on the face hereof; provided, however, that, unless
otherwise specified on the face hereof, the interest rate hereon will not
be less than zero percent. Commencing on the Initial Interest Reset
Date, the rate at which interest on this Note is payable shall be reset
as of each Interest Rate Reset Date specified on the face hereof;
provided, however, that the interest rate in effect for the period from
the Original Issue Date to the Initial Interest Reset Date shall be the
Initial Interest Rate.
Notwithstanding the foregoing, if this Note is designated on the face
hereof as having an Addendum attached, this Note shall bear interest in
accordance with the terms described in such Addendum.
Except as provided above, the interest rate in effect on each day shall
be (a) if such day is an Interest Reset Date, the interest rate determined as
of the Interest Determination Date (as defined below) immediately preceding
such Interest Reset Date or (b) if such day is not an Interest Reset Date, the
interest rate determined as of the Interest Determination Date immediately
preceding the next preceding Interest Reset Date. Each Interest Rate Basis
shall be the rate determined in accordance with the applicable provision
below. If any Interest Reset Date (which term includes the term Initial
Interest Reset Date unless the context otherwise requires) would otherwise be
a day that is not a Business Day, such Interest Reset Date shall be postponed
to the next succeeding day that is a Business Day, except that if an Interest
Rate Basis specified on the face hereof is LIBOR and such next Business Day
falls in the next succeeding calendar month, such Interest Reset Date shall be
the immediately preceding Business Day.
Unless otherwise specified on the face hereof, interest payable on this
Note on any Interest Payment Date shall be the
10
<PAGE> 46
amount of interest accrued from and including the next preceding Interest
Payment Date in respect of which interest has been paid (or from and including
the Original Issue Date specified on the face hereof, if no interest has been
paid), to but excluding the related Interest Payment Date or Maturity Date or
date of earlier redemption or repayment, as the case may be.
Unless otherwise specified on the face hereof, accrued interest hereon
shall be an amount calculated by multiplying the face amount hereof by an
accrued interest factor. Such accrued interest factor shall be computed by
adding the interest factor calculated for each day in the period for which
accrued interest is being calculated. Unless otherwise specified on the face
hereof, the interest factor for each such day shall be computed and paid on
the basis of a 360-day year of twelve 30-day months if the Day Count
Convention specified on the face hereof is "30/360" for the period specified
thereunder, or by dividing the interest rate applicable to such day by 360 if
the Day Count Convention specified on the face hereof is "Actual/360" for the
period specified thereunder or by the actual number of days in the year if the
Day Count Convention specified on the face hereof is "Actual/Actual" for the
period specified thereunder. If interest on this Note is to be calculated
with reference to two or more Interest Rate Bases as specified on the face
hereof, the interest factor will be calculated in each period in the same
manner as if only one of the applicable Interest Rate Bases applied.
Unless otherwise specified on the face hereof, the "Interest
Determination Date" with respect to the Commercial Paper Rate, the Federal
Funds Rate and the Prime Rate will be the second Business Day preceding each
Interest Reset Date; the "Interest Determination Date" with respect to the
Eleventh District Cost of Funds Rate will be the last working day of the month
immediately preceding each Interest Reset Date on which the Federal Home Loan
Bank of San Francisco (the "FHLB of San Francisco") publishes the Index (as
defined below); the "Interest Determination Date" with respect to LIBOR shall
be the second London Business Day (as defined below) preceding each Interest
Reset Date; the "Interest Determination Date" with respect to the Treasury
Rate will be the day in the week in which the related Interest Reset Date
falls on which day Treasury Bills (as defined below) are normally auctioned
(Treasury Bills are normally sold at auction on Monday of each week, unless
that day is a legal holiday, in which case
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<PAGE> 47
the auction is normally held on the following Tuesday, except that such
auction may be held on the preceding Friday); provided, however, that if an
auction is held on the Friday of the week preceding the related Interest Reset
Date, the related Interest Determination Date shall be such preceding Friday;
and provided, further, that if an auction shall fall on any Interest Reset
Date, then the Interest Reset Date shall instead be the first Business Day
following such auction. If the interest rate of this Note is determined with
reference to two or more Interest Rate Bases as specified on the face hereof,
the Interest Determination Date pertaining to this Note will be the latest
Business Day which is at least two Business Days prior to such Interest Reset
Date on which each Interest Rate Basis is determinable. Each Interest Rate
Basis shall be determined on such date, and the applicable interest rate shall
take effect on the Interest Reset Date.
Unless otherwise specified on the face hereof, the "Calculation Date"
pertaining to any Interest Determination Date will be the earlier of (i) the
tenth calendar day after such Interest Determination Date or, if such day is
not a Business Day, the next succeeding Business Day and (ii) the Business Day
immediately preceding the applicable Interest Payment Date or Maturity Date or
date of earlier redemption or repayment, as the case may be. All calculations
on this Note shall be made by the Calculation Agent specified on the face
hereof or such successor thereto as is duly appointed by the Bank.
All percentages resulting from any calculation on this Note will be
rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upward (e.g.,
9.876545% (or 0.09876545) would be rounded to 9.87655% (or 0.0987655) and
9.876544% (or 0.09876544) would be rounded to 9.87654% (or 0.0987654)), and
all dollar amounts used in or resulting from such calculation will be rounded
to the nearest cent (with one-half cent being rounded upward).
As used herein, "Business Day" means, unless otherwise specified on the
face hereof, any day that is not a Saturday or Sunday and that in The City of
New York or in the city in which the Bank is headquartered is not a day on
which banking institutions are authorized or required by law, regulation or
12
<PAGE> 48
executive order to close and, if an Interest Rate Basis shown on the face
hereof is LIBOR, is also a London Business Day.
As used herein, unless otherwise specified on the face hereof, "London
Business Day" means any day on which dealings in deposits in U.S. dollars are
transacted in the London interbank market.
Determination of Commercial Paper Rate. If an Interest Rate Basis for
this Note is the Commercial Paper Rate, as indicated on the face hereof, the
Commercial Paper Rate shall be determined as of the applicable Interest
Determination Date (a "Commercial Paper Rate Interest Determination Date"), as
the Money Market Yield (as defined below) on such date of the rate for
commercial paper having the Index Maturity specified on the face hereof as
published by the Board of Governors of the Federal Reserve System in the
weekly statistical release entitled "Statistical Release H.15(519), Selected
Interest Rates," or any successor publication of the Board of Governors of the
Federal Reserve System ("H.15(519)") under the heading "Commercial Paper". In
the event that such rate is not published by 3:00 P.M., New York City time, on
the related Calculation Date, then the Commercial Paper Rate shall be the
Money Market Yield on such Commercial Paper Rate Interest Determination Date
of the rate for commercial paper having the Index Maturity shown on the face
hereof as published in the daily statistical release entitled "Composite 3:30
P.M. Quotations for U.S. Government Securities" or any successor publication
published by the Federal Reserve Bank of New York ("Composite Quotations")
under the heading "Commercial Paper" (with an Index Maturity of one month or
three months being deemed to be equivalent to an Index Maturity of 30 days or
90 days, respectively). If by 3:00 P.M., New York City time, on the related
Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the Commercial Paper Rate on such Commercial Paper
Rate Interest Determination Date shall be calculated by the Calculation Agent
and shall be the Money Market Yield of the arithmetic mean of the offered
rates at approximately 11:00 A.M., New York City time, on such Commercial
Paper Rate Interest Determination Date of three leading dealers of commercial
paper in The City of New York selected by the Calculation Agent for commercial
paper having the Index Maturity specified on the face hereof placed for an
industrial issuer whose bond rating is "AA," or the equivalent, from a
nationally recognized securities rating agency; provided, however, that if
13
<PAGE> 49
any of the dealers selected as aforesaid by the Calculation Agent are not
quoting as mentioned in this sentence, the Commercial Paper Rate determined as
of such Commercial Paper Rate Interest Determination Date shall be the rate in
effect on such Commercial Paper Rate Interest Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage)
calculated in accordance with the following formula:
Money Market Yield = D x 360 x 100
------------
360-(D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal and "M" refers to the
actual number of days in the interest period for which interest is being
calculated.
Determination of Eleventh District Cost of Funds Rate. If an Interest
Rate Basis for this Note is the Eleventh District Cost of Funds Rate, as
indicated on the face hereof, the Eleventh District Cost of Funds Rate shall
be determined as of the applicable Interest Determination Date (an "Eleventh
District Cost of Funds Rate Interest Determination Date"), as the rate equal
to the monthly weighted average cost of funds for the calendar month
immediately preceding the month in which such Eleventh District Cost of Funds
Rate Interest Determination Date falls, as set forth under the caption "11th
District" on Telerate Page 7058 as of 11:00 A.M., San Francisco time, on such
Eleventh District Cost of Funds Rate Interest Determination Date. If such
rate does not appear on Telerate Page 7058 on any related Eleventh District
Cost of Funds Rate Interest Determination Date, the Eleventh District Cost of
Funds Rate for such Eleventh District Cost of Funds Rate Interest
Determination Date shall be the monthly weighted average cost of funds paid by
member institutions of the Eleventh Federal Home Loan Bank District that was
most recently announced (the "Index") by the FHLB of San Francisco as such
cost of funds for the calendar month immediately preceding the date of such
announcement. If the FHLB of San Francisco fails to announce such rate for
the calendar month immediately preceding such Eleventh District Cost of Funds
Rate Interest Determination Date, then the Eleventh District Cost of Funds
Rate determined as of such Eleventh District Cost of Funds Rate Interest
Determination Date shall be the Eleventh
14
<PAGE> 50
District Cost of Funds Rate in effect on such Eleventh District Cost of Funds
Rate Interest Determination Date.
"Telerate Page 7058" means the display designated as page "7058" on the
Dow Jones Telerate Service (or such other page as may replace the 7058 page on
that service for the purpose of displaying the monthly weighted average cost
of funds paid by member institutions of the Eleventh Federal Home Loan Bank
District).
Determination of Federal Funds Rate. If an Interest Rate Basis for this
Note is the Federal Funds Rate, as indicated on the face hereof, the Federal
Funds Rate shall be determined as of the applicable Interest Determination
Date (a "Federal Funds Rate Interest Determination Date"), as the rate on such
date for federal funds as published in H.15(519) under the heading "Federal
Funds (Effective)" or, if not so published by 3:00 P.M., New York City time,
on the related Calculation Date, the rate on such Federal Funds Rate Interest
Determination Date, as published in Composite Quotations under the heading
"Federal Funds/Effective Rate." If by 3:00 P.M., New York City time, on the
related Calculation Date such rate is not published in either H.15(519) or
Composite Quotations, then the Federal Funds Rate on such Federal Funds Rate
Interest Determination Date shall be calculated by the Calculation Agent and
shall be the arithmetic mean of the rates for the last transaction in
overnight United States dollar federal funds arranged prior to 9:00 A.M., New
York City time on such Federal Funds Rate Interest Determination Date by three
leading brokers of federal funds transactions in The City of New York selected
by the Calculation Agent; provided, however, that if any of the brokers
selected as aforesaid by the Calculation Agent are not quoting as mentioned in
this sentence, the Federal Funds Rate determined as of such Federal Funds Rate
Interest Determination Date shall be the Federal Funds Rate in effect on such
Federal Funds Rate Interest Determination Date.
Determination of LIBOR. If an Interest Rate Basis for this Note is
LIBOR, as indicated on the face hereof, LIBOR shall be determined by the
Calculation Agent as of the applicable Interest Determination Date (a "LIBOR
Interest Determination Date") in accordance with the following provisions:
(a) With respect to any LIBOR Interest Determination Date, LIBOR
will be, as specified on the face hereof,
15
<PAGE> 51
either: (i) the rate for deposits in U.S. dollars having the Index
Maturity designated on the face hereof, commencing on the second London
Business Day immediately following that LIBOR Interest Determination
Date, that appears on the Telerate Page 3750 as of 11:00 A.M., London
time, on that LIBOR Interest Determination Date ("LIBOR Telerate") or
(ii) the arithmetic mean of the offered rates for deposits in U.S.
dollars having the Index Maturity designated on the face hereof,
commencing on the second London Business Day immediately following that
LIBOR Interest Determination Date, that appear on the Reuters Screen LIBO
Page as of 11:00 A.M., London time, on that LIBOR Interest Determination
Date, if at least two such offered rates appear on the Reuters Screen
LIBO Page ("LIBOR Reuters"). "Telerate Page 3750" means the display
designated as page "3750" on the Telerate Service (or such other page as
may replace the 3750 page on that service or such other service or
services as may be nominated by the British Bankers' Association for the
purpose of displaying London interbank offered rates for U.S. dollar
deposits). "Reuters Screen LIBO Page" means the display designated as
page "LIBO" on the Reuters Monitor Money Rates Service (or such other
page as may replace the LIBO page on that service for the purpose of
displaying London interbank offered rates of major banks). If neither
LIBOR Telerate nor LIBOR Reuters is specified on the face hereof, LIBOR
will be determined as if LIBOR Telerate had been specified. If no rate
appears on the Telerate Page 3750, or if fewer than two offered rates
appear on the Reuters Screen LIBO Page, as applicable, LIBOR in respect
of that LIBOR Interest Determination Date will be determined as if the
parties had specified the rate described in (b) below.
(b) With respect to a LIBOR Interest Determination Date on which no
rate appears on Telerate Page 3750, as specified in (a)(i) above, or on
which fewer than two offered rates appear on the Reuters Screen LIBO
Page, as specified in (a)(ii) above, as applicable, LIBOR will be
determined on the basis of the rates at which deposits in U.S. dollars
having the Index Maturity designated on the face hereof, are offered at
approximately 11:00 A.M., London time, on that LIBOR Interest
Determination Date by four major banks in the London interbank market
selected by the Calculation Agent ("Reference Banks") to prime banks in
the
16
<PAGE> 52
London interbank market commencing on the second London Business Day
immediately following that LIBOR Interest Determination Date and in a
principal amount equal to an amount of not less than $1,000,000 that is
representative for a single transaction in such market at such time. The
Calculation Agent will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, LIBOR in respect of that LIBOR Interest
Determination Date will be the arithmetic mean of such quotations. If
fewer than two quotations are provided, LIBOR in respect of that LIBOR
Interest Determination Date will be the arithmetic mean of the rates
quoted at approximately 11:00 A.M., New York City time, on that LIBOR
Interest Determination Date by three major banks in The City of New York
selected by the Calculation Agent for loans in U.S. dollars to leading
European banks having the Index Maturity designated on the face hereof,
commencing on the second London Business Day immediately following that
LIBOR Interest Determination Date and in a principal amount equal to an
amount of not less than $1,000,000 that is representative for a single
transaction in such market at such time; provided, however, that if the
banks selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, LIBOR with respect to such LIBOR Interest
Determination Date will be the rate of LIBOR in effect on such date.
Determination of Prime Rate. If an Interest Rate Basis for this Note is
the Prime Rate, as indicated on the face hereof, the Prime Rate shall be
determined as of the applicable Interest Determination Date (a "Prime Rate
Interest Determination Date") as the rate on such date as such rate is
published in H.15(519) under the heading "Bank Prime Loan". If such rate is
not published prior to 3:00 P.M., New York City time, on the related
Calculation Date, then the Prime Rate shall be the arithmetic mean of the
rates of interest publicly announced by each bank that appears on the Reuters
Screen USPRIME1 (as defined below) as such bank's prime rate or base lending
rate as in effect for such Prime Rate Interest Determination Date. If fewer
than four such rates appear on the Reuters Screen USPRIME1 for such Prime Rate
Interest Determination Date, the Prime Rate shall be the arithmetic mean of
the prime rates quoted on the basis of the actual number of days in the year
divided by a 360-day year as of the close of business on such Prime Rate
Interest Determination
17
<PAGE> 53
Date by four major money center banks in The City of New York selected by the
Calculation Agent. If fewer than four major money center banks provide such
quotations, the Prime Rate will be determined by the Calculation Agent and
will be the arithmetic mean of four prime rates, quoted on the basis of the
actual number of days in the year divided by a 360-day year, as of the close
of business on such Prime Rate Interest Determination Date as furnished in The
City of New York by the major money center banks, if any, that have provided
quotations and as many substitute banks or trust companies as is necessary in
order to obtain four such prime rate quotations, provided such substitute
banks or trust companies are organized and doing business under the laws of
the United States, or any state thereof, each having total equity capital of
at least U.S. $500 million and being subject to supervision or examination by
federal or state authority, selected by the Calculation Agent to provide such
rate or rates; provided, however, that if the banks or trust companies
selected as aforesaid are not quoting as mentioned in this sentence, the Prime
Rate determined as of such Prime Rate Interest Determination Date shall be the
Prime Rate in effect on such Prime Rate Interest Determination Date.
"Reuters Screen USPRIME1" means the display designated as page "USPRIME1"
on the Reuters Monitor Money Rates Service (or such other page as may replace
the USPRIME1 page on that service for the purpose of displaying prime rates or
base lending rates of major United States banks).
Determination of Treasury Rate. If an Interest Rate Basis for this Note
is the Treasury Rate, as specified on the face hereof, the Treasury Rate shall
be determined as of the applicable Interest Determination Date (a "Treasury
Rate Interest Determination Date") as the rate applicable to the most recent
auction of direct obligations of the United States ("Treasury Bills") having
the Index Maturity specified on the face hereof, as such rate is published in
H.15(519) under the heading "Treasury Bills -- auction average (investment)"
or, if not published by 3:00 P.M., New York City time, on the related
Calculation Date, the auction average rate (expressed as a bond equivalent on
the basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) as otherwise announced by the United States Department of the Treasury.
In the event that the results of the auction of Treasury Bills having the
Index Maturity specified on the face hereof are not reported as
18
<PAGE> 54
provided by 3:00 P.M., New York City time, on such Calculation Date, or if no
such auction is held in a particular week, then the Treasury Rate shall be
calculated by the Calculation Agent and shall be a yield to maturity
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 P.M., New York City time,
on such Treasury Rate Interest Determination Date, of three leading primary
United States government securities dealers selected by the Calculation Agent,
for the issue of Treasury Bills with a remaining maturity closest to the Index
Maturity specified on the face hereof; provided, however, that if any of the
dealers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the Treasury Rate determined as of such Treasury
Rate Interest Determination Date shall be the Treasury Rate in effect on such
Treasury Rate Interest Determination Date.
Any provision contained herein, including the determination of an
Interest Rate Basis, the specification of an Interest Rate Basis, calculation
of the interest rate applicable to this Note, its Interest Payment Dates or
any other matter relating hereto may be modified as specified in an Addendum
relating hereto if so specified on the face hereof.
Notwithstanding the foregoing, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, specified on the face hereof. In addition to any
Maximum Interest Rate applicable hereto pursuant to the above provisions, the
interest rate on this Note will in no event be higher than the maximum rate
permitted by New York law, as the same may be modified by United States law of
general application. The Calculation Agent shall calculate the interest rate
hereon in accordance with the foregoing on or before each Calculation Date.
Unless otherwise specified on the face hereof, Chemical Bank will be the
Calculation Agent.
At the request of the Holder hereof, the Calculation Agent shall provide
to the Holder hereof the interest rate hereon then in effect and, if
determined, the interest rate which shall become effective as of the next
Interest Reset Date.
19
<PAGE> 55
If this Note is an Original Issue Discount Note and if an Event of
Default with respect to this Note shall have occurred and be continuing, the
Default Amount (as defined hereafter) of this Note may be declared due and
payable in the manner and with the effect provided herein. The "Default
Amount" shall be equal to the adjusted issue price as of the first day of the
accrual period as determined under Final Treasury Regulation Section
1.1275-1(b) (or successor regulation) under the United States Internal Revenue
Code of 1986, as amended, in which the date of acceleration occurs increased
by the daily portion of the original issue discount for each day in such
accrual period ending on the date of acceleration, as determined under Final
Treasury Regulation Section 1.1272-1(b) (or successor regulation) under the
United States Internal Revenue Code of 1986, as amended. Upon payment of (i)
the principal, or premium, if any, so declared due and payable and (ii)
interest on any overdue principal and overdue interest or premium, if any (in
each case to the extent that the payment of such interest shall be legally
enforceable), all of the Bank's obligations in respect of the payment of
principal of, premium, if any, and interest on, this Note shall terminate.
In case any Note shall at any time become mutilated, destroyed, lost or
stolen, and such Note or evidence of the loss, theft or destruction thereof
satisfactory to the Bank and the Issuing and Paying Agent and such other
documents or proof as may be required by the Bank and the Issuing and Paying
Agent shall be delivered to the Issuing and Paying Agent, the Bank shall issue
a new Note, of like tenor and principal amount, having a serial number not
contemporaneously outstanding, in exchange and substitution for the mutilated
Note or in lieu of the Note destroyed, lost or stolen but, in the case of any
destroyed, lost or stolen Note, only upon receipt of evidence satisfactory to
the Bank and the Issuing and Paying Agent that such Note was destroyed, stolen
or lost, and, if required, upon receipt of indemnity satisfactory to the Bank
and the Issuing and Paying Agent. Upon the issuance of any substituted Note,
the Bank and the Issuing and Paying Agent may require the payment of a sum
sufficient to cover all expenses and reasonable charges connected with the
preparation and delivery of a new Note. If any Note which has matured or has
been redeemed or repaid or is about to mature or to be redeemed or repaid
shall become mutilated, destroyed, lost or stolen, the Bank may, instead of
issuing a substitute Note, pay or authorize the payment of the same
20
<PAGE> 56
(without surrender thereof except in the case of a mutilated Note) upon
compliance by the holder with the provisions of this paragraph.
No recourse shall be had for the payment of principal of, premium, if
any, or interest on, this Note for any claim based hereon, or otherwise in
respect hereof, against any shareholder, employee, agent, officer or director,
as such, past, present or future, of the Bank or of any successor corporation,
banking association or other legal entity (collectively, "corporation"),
either directly or through the Bank or any successor corporation, whether by
virtue of any constitution, statute or rule of law or by the enforcement of
any assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
The occurrence of any of the following events shall constitute an "Event
of Default" with respect to this Note: (i) default in the payment of any
interest with respect to any of the Notes issued by the Bank when due, which
continues for 30 calendar days; (ii) default in the payment of any principal
of, or premium, if any, on, any of the Notes issued by the Bank when due;
(iii) the entry by a court having jurisdiction in the premises of (a) a decree
or order for relief in respect of the Bank in an involuntary case or
proceeding under any applicable United States federal or state bankruptcy,
insolvency, reorganization or other similar law or (b) a decree or order
appointing a conservator, receiver, liquidator, assignee, trustee,
sequestrator or any other similar official of the Bank, or of substantially
all of the property of the Bank, or ordering the winding up or liquidation of
the affairs of the Bank, and the continuance of any such decree or order for
relief or any such other decree or order unstayed and in effect for a period
of 60 consecutive days; or (iv) the commencement by the Bank of a voluntary
case or proceeding under any applicable United States federal or state
bankruptcy, insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated as bankrupt or insolvent, or the consent
by the Bank to the entry of a decree or order for relief in an involuntary
case or proceeding under any applicable United States federal or state
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding, or the filing
by the Bank of a petition or answer or
21
<PAGE> 57
consent seeking reorganization or relief under any applicable United States
federal or state bankruptcy, insolvency, reorganization or similar law, or the
consent by the Bank to the filing of such petition or to the appointment of or
taking possession by a custodian, conservator, receiver, liquidator, assignee,
trustee, sequestrator or similar official of the Bank or of substantially all
of the property of the Bank, or the making by the Bank of an assignment for
the benefit of creditors, or the taking of corporate action by the Bank in
furtherance of any such action. If an Event of Default shall occur and be
continuing, the holder of this Note may declare the principal amount of,
accrued interest and premium, if any, on, this Note due and payable
immediately by written notice to the Bank. Upon such declaration and notice,
such principal amount, accrued interest and premium, if any, shall become
immediately due and payable. Any Event of Default with respect to this Note
may be waived by the holder hereof.
The Issuing and Paying Agency Agreement provides that the Bank will
promptly notify, and provide copies of any such notice to, the Issuing and
Paying Agent, and the Issuing and Paying Agent will promptly mail by
first-class mail, postage prepaid, copies of such notice to the holders of the
Notes, upon the occurrence of an Event of Default or of the curing or waiver
of an Event of Default.
Nothing contained herein shall prevent any consolidation or merger of the
Bank with any other corporation or successive consolidations or mergers in
which the Bank or its successor or successors shall be a party or parties, or
shall prevent any sale, conveyance, transfer or lease of the property of the
Bank as an entirety or substantially as an entirety to any other corporation
authorized to acquire and operate the same; provided, however (and the Bank
hereby covenants and agrees) that any such consolidation, merger, sale or
conveyance shall be upon the condition that: (i) immediately after such
consolidation, merger, sale or conveyance the corporation (whether the Bank or
such other corporation) formed by or surviving any such consolidation or
merger, or the corporation to
22
<PAGE> 58
which such sale or conveyance shall have been made, shall not be in default in
the performance or observance of any of the terms, covenants and conditions of
this Note to be observed or performed by the Bank; and (ii) the corporation
(if other than the Bank) formed by or surviving any such consolidation or
merger, or the corporation to which such sale or conveyance shall have been
made, shall be organized under the laws of the United States of America or any
state thereof or the District of Columbia and shall expressly assume the due
and punctual payment of the principal of, premium, if any, and interest on,
this Note. In case of any such consolidation, merger, sale, conveyance,
transfer or lease, and upon the assumption by the successor corporation of the
due and punctual performance of all of the covenants in this Note to be
performed or observed by the Bank, such successor corporation shall succeed to
and be substituted for the Bank with the same effect as if it had been named
in this Note as the Bank and thereafter the predecessor corporation shall be
relieved of all obligations and covenants in this Note and may be liquidated
and dissolved.
Any action by the holder of this Note shall bind all future holders of
this Note, and of any Note issued in exchange or substitution hereof or in
place hereof, in respect of anything done or permitted by the Bank or by the
Issuing and Paying Agent in pursuance of such action.
The Issuing and Paying Agent shall maintain at its offices a register
(the register maintained in such office or any other office or agency of the
Issuing and Paying Agent in The City of New York, herein referred to as the
"Note Register") in which, subject to such reasonable regulations as it may
prescribe, the Issuing and Paying Agent shall provide for the registration of
the Notes and of transfers of the Notes.
The transfer of this Note is registrable in the Note Register, upon
surrender of this Note for registration of transfer at the office or agency of
the Issuing and Paying Agent in the Place of Payment, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Bank and the Issuing and Paying Agent duly executed by, the holder hereof or
his attorney duly authorized in writing, and thereupon one or more new Notes
of like tenor, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
No provision of this Note shall alter or impair the obligation of the
Bank, which is absolute and unconditional, to pay principal of, premium, if
any, and interest on, this Note in
23
<PAGE> 59
U.S. dollars at the times, places and rate herein prescribed in accordance
with its terms.
No service charge shall be made to a holder of this Note for any transfer
or exchange of this Note, but the Bank may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in
connection therewith.
Beneficial interests represented by this Note are exchangeable for
definitive Notes in registered form, of like tenor and of an equal aggregate
principal amount, only if (x) The Depository Trust Company, as Depositary (the
"Depositary") notifies the Bank that it is unwilling or unable to continue as
Depositary for this Note or if at any time the Depositary ceases to be a
clearing agency registered under the Securities Exchange Act of 1934, as
amended, and a successor depositary is not appointed by the Bank within 60
days, or (y) the Bank in its sole discretion determines not to have such
beneficial interests represented by this Note. Any Note representing such
beneficial interests that is exchangeable pursuant to the preceding sentence
shall be exchangeable in whole for definitive Notes in registered form, of
like tenor and of an equal aggregate principal amount, in minimum
denominations of $100,000 and integral multiples of $1,000 in excess thereof.
Such definitive Notes shall be registered in the name or names of such person
or persons as the Depositary shall instruct the Issuing and Paying Agent.
Prior to due presentment of this Note for registration of transfer, the
Bank, the Issuing and Paying Agent or any agent of the Bank or the Issuing and
Paying Agent may treat the holder in whose name this Note is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and
neither the Bank, the Issuing and Paying Agent nor any such agent shall be
affected by notice to the contrary except as required by applicable law.
All notices to the Bank under this Note shall be in writing and addressed
to the Bank, 2980 Fairview Park Drive, Falls Church, Virginia 22042,
Attention: Treasurer, or to such other address of the Bank as the Bank may
notify the holders of the Notes.
This Note shall be governed by, and construed in accordance with, the
laws of the State of New York, without regard to
24
<PAGE> 60
conflicts of laws principles and all applicable federal laws and regulations.
25
<PAGE> 61
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
the within Note, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT - Custodian
---------- ---------
(Cust) (Minor)
under Uniform Gifts to Minors Act
----------------------------------
(State)
Additional abbreviations may also be used
though not in the above list.
26
<PAGE> 62
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto _______________________________________________
______________________________________________________________________________
PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
____________________________
/___________________________/
______________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name and address,
including postal zip code, of assignee)
the within Note and all rights thereunder, and hereby
irrevocably constitutes and appoints__________________________________________
______________________________________________________________________________
______________________________________________________________________________
to transfer said Note on the books of the Issuing and Paying
Agent, with full power of substitution in the premises.
Dated: ----------------------------------------------
------------------ NOTICE: The signature to this assignment
must correspond with the name as written
upon the face of the within Note in every
particular, without alteration or
enlargement or any change whatsoever.
- --------------------------------
Signature Guarantee
27
<PAGE> 63
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the Bank to
repay this Note (or portion hereof specified below) pursuant to its terms at a
price equal to 100% of the principal amount hereof to be repaid, together with
accrued and unpaid interest hereon, payable to the date of repayment, to the
undersigned, at ______________________________________________________________
______________________________________________________________________________.
(Please print or typewrite name and address of the undersigned)
For this Note to be repaid, the undersigned must give to the Issuing and
Paying Agent at its offices located at 450 West 33rd Street, New York, New
York 10001, Attention: Global Trust Securities Group, or at such other place
or places of which the Bank shall from time to time notify the holders of the
Notes, not more than 60 days nor less than 30 days prior to the date of
repayment, with this "Option to Elect Repayment" form duly completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be increments of $1,000) which the
holder elects to have repaid and specify the denomination or denominations
(which shall be $100,000 or an integral multiple of $1,000 in excess thereof)
of the Notes to be issued to the holder for the portion of this Note not being
repaid (in the absence of any such specification, one such Note will be issued
for the portion not being repaid):
$ ------------------------------
------------------------------ NOTICE: The signature on this
Dated: "Option to Elect Repayment" form must
------------------------ correspond with the name as written upon
the face of the within Note in every
particular, without alteration or
enlargement or any change whatsoever.
- --------------------------------
Signature Guarantee
28
<PAGE> 1
EXHIBIT 10.1
Capital One Bank
Senior and Subordinated Bank Notes
Due From 30 Days to 30 Years from Date of Issue
AMENDED AND RESTATED DISTRIBUTION AGREEMENT
April 30, 1996
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CS FIRST BOSTON CORPORATION
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
LEHMAN BROTHERS
LEHMAN BROTHERS INC.
SALOMON BROTHERS INC
SMITH BARNEY INC.
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310
Ladies and Gentlemen:
Capital One Bank, a banking association chartered under the laws of
the Commonwealth of Virginia (the "Bank"), confirms its agreement with Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, CS First
Boston Corporation, Donaldson, Lufkin & Jenrette Securities Corporation,
Goldman, Sachs & Co., J.P. Morgan Securities Inc., Lehman Brothers, Lehman
Brothers Inc. (including its affiliate Lehman Commercial Paper Inc.), Salomon
Brothers Inc and Smith Barney Inc. (each referred to as an "Agent" and
collectively referred to as the "Agents") with respect (i) the issue and sale
by it of its senior unsecured debt obligations not insured by the Federal
Deposit Insurance Corporation (the "FDIC") with maturities of more than one
year to 30 years from date of issue (the "Medium-Term Senior Bank
<PAGE> 2
Notes"), (ii) to the issue and sale by it of its senior unsecured debt
obligations not insured by the FDIC with maturities from 30 days to not more
than one year from date of issue ("Short-Term Senior Bank Notes" and together
with the Medium-Term Senior Bank Notes, the "Senior Bank Notes"), and (iii) the
issue and sale by it of its subordinated debt obligations not insured by the
FDIC with maturities from five years to 30 years from date of issue
("Subordinated Bank Notes," and together with the Senior Bank Notes, the "Bank
Notes"). The Bank Notes are to be issued pursuant to an Amended and Restated
Issuing and Paying Agency Agreement, dated as of April 30, 1996 (the "Issuing
and Paying Agency Agreement"), between the Bank and Chemical Bank, as the
Issuing and Paying Agent ("Issuing and Paying Agent"). As of the date hereof,
the Bank has authorized the issuance of up to $4,500,000,000 aggregate
principal amount at any one time outstanding of Senior Bank Notes. In
addition, the Bank has authorized the issuance of up to $200,000,000 aggregate
principal amount of its Subordinated Bank Notes. It is understood, however,
that the Bank may from time to time authorize the issuance of an additional
outstanding amount of Bank Notes and that the Bank Notes may be distributed
through or sold to one or more of the Agents pursuant to the terms of this
Agreement, all as though the issuance of the Bank Notes were authorized as of
the date hereof. The Bank is a subsidiary of Capital One Financial Corporation
(the "Parent").
This Agreement provides both for the sale of Bank Notes by the Bank to
the Agents as principal for resale to investors and other purchasers and for
the sale of Bank Notes by the Bank directly to investors through the Agents (as
may from time to time be agreed to by the Bank and the Agents), in which case
the Agents will act as agents of the Bank in soliciting Bank Note purchasers.
SECTION 1. Appointment as Agents.
(a) Appointment of Agents. Subject to the terms and conditions
stated herein and subject to the reservation by the Bank of the right to sell
Bank Notes directly to investors on its own behalf in those jurisdictions where
it is authorized to do so, the Bank hereby agrees that Bank Notes will be sold
exclusively to or through the Agents. The Agents are authorized to engage the
services of any other broker or dealer in connection with the offer or sale of
the Bank Notes purchased by an Agent as principal for resale to others but are
not authorized to appoint sub-agents. In connection with sales by the Agents
of Bank Notes purchased by an Agent as principal to other brokers or dealers,
an Agent may allow any portion of the discount it has received in connection
with such purchase from the Bank to such brokers or dealers.
2
<PAGE> 3
(b) Sale of Bank Notes. The Bank shall not approve the solicitation
of purchases of Bank Notes in excess of the amount which shall be authorized to
be outstanding by the Bank from time to time or in excess of the aggregate
principal amount of Bank Notes specified in the Offering Circular. The Agents
will have no responsibility for maintaining records with respect to the
aggregate principal amount of Bank Notes sold or outstanding, or of otherwise
monitoring the availability of Bank Notes for sale.
(c) Purchases as Principal. The Agents shall not have any obligation
to purchase Bank Notes from the Bank as principal, but the Agents may agree
from time to time to purchase Bank Notes as principal. Any such purchase of
Bank Notes by an Agent as principal shall be made in accordance with Section
3(a) hereof.
(d) Solicitations as Agent. If agreed upon by an Agent and the
Bank, the Agent acting solely as agent for the Bank and not as principal, will
solicit purchases of the Bank Notes. The Agent will communicate to the Bank,
orally or in writing, each offer to purchase Bank Notes solicited by such Agent
on an agency basis, other than those offers rejected by the Agent. The Agent
shall have the right, in its discretion reasonably exercised, to reject any
proposed purchase of Bank Notes, as a whole or in part, and any such rejection
shall not be deemed a breach of any Agent's agreement contained herein. The
Bank may accept or reject any proposed purchase of the Bank Notes, in whole or
in part. The Agent shall make reasonable efforts to assist the Bank in
obtaining performance by each purchaser whose offer to purchase Bank Notes has
been solicited by the Agent and accepted by the Bank. The Agent shall not have
any liability to the Bank in the event any such agency purchase is not
consummated for any reason. If the Bank shall default on its obligation to
deliver Bank Notes to a purchaser whose offer it has accepted, the Bank shall
(i) hold the Agent harmless against any loss, claim or damage arising from or
as a result of such default by the Bank and (ii) notwithstanding such default,
pay to the Agent any commission to which it would be entitled in connection
with such sale.
(e) Additional Agents. The Bank may, from time to time, engage
additional agents either as principal or as an agent for the sale of the Bank
Notes. In the event that the Bank elects to engage such additional agents, the
Bank shall provide notice to the Agents then parties to this Agreement. Any
additional agents shall be required, as a condition to their engagement, either
to enter into this Agreement (amended to include such additional agents as
signatories) or into an agreement with the Bank substantially similar to this
Agreement.
(f) Reliance. The Bank and the Agents agree that the Bank Notes
purchased by the Agents shall be purchased, and the Bank
3
<PAGE> 4
Notes the placement of which an Agent arranges shall be placed by such Agent,
in reliance on the representations, warranties, covenants and agreements of the
Bank contained herein and on the terms and conditions and in the manner
provided herein.
SECTION 2. Representations and Warranties.
(a) The Bank represents and warrants to each Agent as of the date
hereof, as of the date of each acceptance by the Bank of an offer for the
purchase of Bank Notes (whether to the Agent as principal or through the Agent
as agent), as of the date of each delivery of Bank Notes (whether to such Agent
as principal or through such Agent as agent) (the date of each such delivery to
an Agent as principal being hereafter referred to as a "Settlement Date"), and
as of the times referred to in Section 8(b) hereof (each of the times
referenced above being referred to hereafter as a "Representation Date"), as
follows:
(i) Offering Circular. The Bank has prepared an offering
circular, dated April 30, 1996 (as such document may hereafter be
amended or supplemented by the Bank, including the material
incorporated therein by reference, the "Offering Circular"), to be
used by the Agents in connection with the Agents' solicitation of
purchasers of or offering of the Bank Notes. The Bank has been
authorized by the Parent to incorporate by reference in the Offering
Circular the Parent's annual reports on Form 10-K, quarterly reports
on Form 10-Q and current reports on Form 8-K filed by the Parent with
the Securities and Exchange Commission (the "Commission") pursuant to
the Securities Exchange Act of 1934, as amended (the "1934 Act"), and
the rules and regulations thereunder. The Offering Circular, as of
the date hereof, does not and, as of the applicable Representation
Date, will not contain an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they are
made, not misleading; provided, however, that the representations and
warranties in this subsection shall not apply to statements in or
omissions from the Offering Circular made in reliance upon and in
conformity with information furnished to the Bank in writing by the
Agents expressly for use therein.
The Bank has incorporated by reference in the Offering
Circular the publicly available portions of each of its Consolidated
Reports of Condition and Income (each, a "Call Report"), and any
amendments or supplements thereto, beginning with and including the
Call Report for the period ended December 31, 1994 to and including
the most recent Call Report filed or published prior to the offering
of Bank Notes. The publicly available portions of any Call Reports
filed by the Bank subsequent to the date of the Offering
4
<PAGE> 5
Circular and prior to the termination of the offering of the Bank
Notes will be incorporated therein by reference.
The documents incorporated by reference into the Offering
Circular, at the time they were or hereafter are filed with the
applicable federal regulatory authorities, complied or when so filed
will comply in all material respects with the 1934 Act or the rules
and regulations otherwise applicable thereto, as the case may be and,
when read together with the other information in the Offering
Circular, did not and will not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they were or are made, not
misleading.
(ii) Due Organization, Valid Existence and Good Standing.
The Bank is a banking corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Virginia, and
is licensed, registered or qualified to conduct the business in which
it is engaged in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
license, registration or qualification, except to the extent that the
failure to be so licensed, registered or qualified or to be in good
standing would not have a material adverse effect on the Bank and its
subsidiaries taken as a whole. The Bank is a subsidiary of the
Parent, a Delaware corporation which has securities registered under
the 1934 Act.
(iii) Due Authorization, Execution and Delivery of this Agreement,
the Issuing and Paying Agency Agreement, the Interest Calculation
Agreement and the Letters of Representations. This Agreement, the
Issuing and Paying Agency Agreement and the Amended and Restated
Interest Calculation Agreement dated as of April 30, 1996 between the
Bank and Chemical Bank (the "Interest Calculation Agreement"), and the
Short-Term and Medium-Term Letters of Representation dated April 30,
1996 (the "Letters of Representation"), between the Bank, the Issuing
and Paying Agent and The Depository Trust Company, have been duly
authorized, executed and delivered by the Bank and are valid and
legally binding agreements of the Bank, enforceable against the Bank
in accordance with their respective terms, subject to applicable
bankruptcy, liquidation, insolvency, fraudulent transfer,
reorganization, moratorium, conservatorship, receivership and similar
laws of general applicability relating to, or affecting, creditors'
rights, to general equity principles and, with respect to any
indemnification or contribution obligation, to public policies which
might affect such obligations.
5
<PAGE> 6
(iv) Due Authorization, Execution and Delivery of the Bank Notes.
The Bank Notes have been duly authorized for issuance and sale
pursuant to this Agreement and, when issued and authenticated against
payment of the consideration therefor, the Bank Notes will be valid
and legally binding obligations of the Bank, enforceable against the
Bank in accordance with their respective terms, subject to applicable
bankruptcy, liquidation, insolvency, fraudulent transfer,
reorganization, moratorium, conservatorship, receivership and similar
laws of general applicability relating to, or affecting, creditors'
rights to general equity principles and, with respect to any
indemnification or contribution obligation, to public policies which
might affect such obligations.
(v) Exemption from Registration. The Bank Notes are exempt
from registration under Section 3(a)(2) of the Securities Act of 1933,
as amended (the "1933 Act"), and neither registration of the Bank
Notes under the 1933 Act, nor qualification of an indenture under the
Trust Indenture Act of 1939, as amended, will be required in
connection with the offer, sale, issuance or delivery of the Bank
Notes pursuant to this Agreement or any applicable Terms Agreement (as
defined in Section 3(a) hereof).
(vi) Exemption from Investment Company Act. The Bank is not
required to register under the provisions of the Investment Company
Act of 1940, as amended (the "Investment Company Act"), or to take any
other action with respect to or under the Investment Company Act.
(vii) No Other Approvals Required. No consent, approval or
authorization of or filing with any governmental body or agency is
required for the performance by the Bank of its obligations under this
Agreement, the Bank Notes, the Issuing and Paying Agency Agreement,
the Interest Calculation Agreement, the Letters of Representation and
any applicable Terms Agreement, except such as may be required by the
securities or Blue Sky laws of the various states in connection with
the offer and sale of the Bank Notes.
(viii) Description of Bank Notes. The Bank Notes are substantially
in the form heretofore delivered to the Agents and conform in all
material respects to the description thereof contained in the Offering
Circular under the caption "Description of Notes."
(ix) Priority of Bank Notes. The Senior Bank Notes are unsecured
and unsubordinated debt obligations of the Bank and rank pari passu
with all other unsecured and unsubordinated debt obligations of the
Bank except, (A) pursuant to Section 11(d)(11) of the Federal Deposit
6
<PAGE> 7
Insurance Act, the Bank's unsecured deposit obligations and (B)
pursuant to Section 6.1 - 110.9 of the Code of Virginia, the Bank's
deposit obligations. The Subordinated Bank Notes are unsecured and
subordinated debt obligations of the Bank, rank pari passu among
themselves, and are subordinated and junior in right of payment to the
Bank's obligations to depositors and general creditors, other than
obligations which, by their express terms, rank on a parity with or
junior to the Subordinated Bank Notes. Upon issuance, the
Subordinated Bank Notes will qualify as Tier 2 capital of the Bank
(within the meaning of Appendix A to 12 C.F.R. Part 208).
(x) No Violation. Neither the Bank or any of its
subsidiaries nor the Parent or any of its subsidiaries is in violation
of its charter or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage loan agreement, note, lease or other
instrument to which it is a party or by which it or any of them or
their properties may be bound which might result in a material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Bank and its
subsidiaries, considered as one enterprise, or might materially and
adversely affect the properties or assets thereof or might materially
and adversely affect the consummation of this Agreement, the Issuing
and Paying Agency Agreement, the Interest Calculation Agreement, the
Letters of Representation or the Notes or any transaction contemplated
hereby or thereby. The execution, issuance and delivery by the Bank
of the Bank Notes, and the execution, delivery and performance by the
Bank of this Agreement, the Issuing and Paying Agency Agreement, the
Interest Calculation Agreement, the Letters of Representations and any
applicable Terms Agreement, will not violate any law, rule,
regulation, order, judgment or decree applicable to the Parent and its
subsidiaries or to the Bank and any of its subsidiaries or violate any
provision of the Bank's charter or by-laws, or conflict with or result
in a material breach of or constitute a material default under, or
result in the creation or imposition of any material lien, charge or
encumbrance upon any property or assets of the Parent and its
subsidiaries or the Bank and any of its subsidiaries pursuant to any
contract, indenture, mortgage loan agreement, note, lease or other
instrument to which the Parent or any of its subsidiaries or the Bank
or any of its subsidiaries, or the property of any of them, is bound
or subject.
(xi) No Material Adverse Change. Since the respective dates as
of which information is given or incorporated by reference in the
Offering Circular (a) there has not been
7
<PAGE> 8
any material adverse change in the condition, financial or otherwise,
or business affairs or business prospects of the Bank and its
subsidiaries or the Parent and its subsidiaries, as the case may be,
considered as one enterprise, whether or not arising in the ordinary
course of business, other than as set forth or contemplated in the
Offering Circular (including the material incorporated by reference
therein), and (b) there have been no material transactions entered
into by the Bank or any of its subsidiaries or the Parent and any of
its subsidiaries considered as one enterprise, other than those in the
ordinary course of business.
(xii) Rating. The Bank Senior Notes of the Bank have been rated
by a "nationally recognized statistical rating agency" (as that term
is defined by the Commission for purposes of Rule 436(g)(2) under the
1933 Act), in one of its four highest categories. The Bank "has
unsecured non-convertible debt with a term of issue of at least four
(4) years, or unsecured non-convertible preferred securities, rated by
a nationally recognized statistical rating organization" within the
meaning of Article III Section 44(b)(7) of The Corporate Financing
Rule of the National Association of Securities Dealers, Inc.
(xiii) Financial Statements and Financial Information. The
financial statements and other financial information of the Parent and
its consolidated subsidiaries and the Bank and its consolidated
subsidiaries included or incorporated by reference in the Offering
Circular present fairly the consolidated financial position of the
Parent and its consolidated subsidiaries and the Bank and its
consolidated subsidiaries, the case may be, as of the date indicated
therein and the consolidated results of their operations for the
periods specified therein; and except as stated therein, such
financial statements have been prepared in conformity with generally
accepted accounting principles in the United States applied on a
consistent basis; financial information of certain financial
institutions, if any, proposed to be acquired by the Parent and the
Bank included or incorporated by reference in the Offering Circular
present fairly the financial position of such financial institutions
as of the dates indicated therein and the results of their operations
for the periods specified therein.
(xiv) Legal Proceedings. Except as may be set forth in the
Offering Circular, there is no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, now
pending, or, to the knowledge of the Bank, threatened against or
affecting, the Parent or any of its subsidiaries or the Bank or any of
its subsidiaries, which might, in the opinion of the Bank,
8
<PAGE> 9
result in any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects
of the Bank and its subsidiaries considered as one enterprise, or
might materially and adversely affect the properties or assets thereof
or might materially and adversely affect the consummation of this
Agreement, the Issuing and Paying Agency Agreement, the Interest
Calculation Agreement or the Notes or any transaction contemplated
hereby or thereby.
(xv) Commodity Exchange Act. The Bank Notes, when issued,
authenticated and delivered pursuant to the provisions of this
Agreement and the Issuing and Paying Agency Agreement, will be
excluded or exempted under the provisions of the Commodity Exchange
Act.
(b) Additional Certifications. Any certificate signed by any
officer of the Bank and delivered to the Agents or to counsel for the Agents in
connection with an offering of Bank Notes, or the sale of Bank Notes to an
Agent as principal, contemplated by this Agreement shall be deemed a
representation and warranty by the Bank to the Agents as to the matters covered
thereby on the date of such certificate and at each Representation Date
referred to in Section 2(a) hereof subsequent thereto.
SECTION 3. Purchases as Principal; Solicitations as Agents.
(a) Purchases as Principal. Unless otherwise agreed by an Agent and
the Bank, Bank Notes shall be purchased by the Agent as principal. Such
purchases shall be made in accordance with terms agreed upon by the Agent and
the Bank with respect to such information (as applicable) as is specified in
Exhibit A hereto (a "Terms Agreement") (which terms shall be agreed upon
orally, and which may or may not be confirmed in writing in the form of Exhibit
A, prepared by the Agent and mailed or sent via facsimile transmission to the
Bank). The Agent's commitment to purchase Bank Notes as principal shall be
deemed to have been made on the basis of the representations and warranties of
the Bank herein contained and shall be subject to the terms and conditions
herein set forth. Each purchase of Bank Notes, unless otherwise agreed, shall
be at a discount from the principal amount of each such Bank Note equivalent to
the applicable commission set forth in Exhibit B hereto. The Agent may engage
the services of any other broker or dealer in connection with the resale of the
Bank Notes purchased as principal and may allow any portion of the discount
received in connection with such purchases from the Bank to such brokers and
dealers. At the time of each purchase of Bank Notes by an Agent as principal,
the Agent shall specify the requirements for the opinions of counsel and
officers' certificates pursuant to Sections 6(a) and 6(b) hereof.
9
<PAGE> 10
(b) Solicitations as Agents. On the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, when agreed upon by the Bank and an Agent, such Agent, as an agent of
the Bank, will use its reasonable efforts to solicit offers to purchase the
Bank Notes upon the terms and conditions set forth herein and in the Offering
Circular. All Bank Notes sold through an Agent as agent will be sold at 100%
of their principal amount unless otherwise agreed to by the Bank and the Agent.
The Bank reserves the right, in its sole discretion, to suspend
solicitation of purchases of the Bank Notes through the Agents, as agents,
commencing at any time for any period of time or permanently. Upon receipt of
instructions from the Bank, the Agents will forthwith suspend solicitation of
purchases from the Bank until such time as the Bank has advised the Agents that
such solicitation may be resumed.
The Bank agrees to pay each Agent a commission, in the form of a
discount, equal to the applicable percentage of the principal amount of each
Bank Note sold by the Bank as a result of a solicitation made by such Agent as
set forth in Exhibit B hereto, or as otherwise agreed to by the Bank and such
Agent. The Agents may reallow any portion of the commission payable pursuant
hereto to dealers in connection with the offer and sale of the Bank Notes.
(c) Administrative Procedures. The purchase price, interest rate or
formula, maturity date and other terms of the Bank Notes (as applicable)
specified in Exhibit A hereto shall be agreed upon by the Bank and the
applicable Agent and set forth in a pricing supplement to the Offering Circular
to be prepared in connection with each sale of Bank Notes. Administrative
procedures with respect to the sale of Bank Notes shall be agreed upon from
time to time by the Agents and the Bank (the "Procedures"). The initial
Administrative Procedures, as agreed upon by the Agents and the Bank, are
attached hereto as Exhibit G. The Agents and the Bank agree to perform the
respective duties and obligations specifically provided to be performed by the
Agents and the Bank herein and in the Procedures.
(d) Delivery. The documents required to be delivered by Section 6
hereof shall be delivered at the office of Brown & Wood, on the date hereof, or
at such other time as the Agents and the Bank may agree upon in writing (the
"Closing Time").
SECTION 4. Covenants of the Bank.
The Bank covenants with the Agents as follows:
(a) Amending Offering Circular. The Bank will give the Agents notice
of its intention to prepare any additional offering
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<PAGE> 11
circular supplement with respect to the sale of the Bank Notes or any amendment
or supplement to the Offering Circular and will furnish the Agents with copies
of any such amendment or supplement or other documents proposed to be
distributed a reasonable time in advance of such proposed distribution and will
not distribute any such amendment or supplement or other documents in a form to
which the Agents or counsel for the Agents shall reasonably object.
(b) Copies of Offering Circular. The Bank will deliver to the Agents
as many copies of the Offering Circular (as amended or supplemented, including
documents incorporated by reference therein) as the Agents shall reasonably
request in connection with sales or solicitations of offers to purchase the
Bank Notes.
(c) Revisions of Offering Circular -- Material Changes. Except as
otherwise provided in Subsection (d) of this Section 4, if any event shall
occur or condition exist as a result of which it is necessary, in the
reasonable opinion of counsel for the Agents or counsel for the Bank, to amend
or supplement the Offering Circular in order that the Offering Circular will
not include any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made therein not misleading in
the light of the circumstances existing at the time it is delivered to a
purchaser, immediate notice shall be given, and confirmed in writing, to the
Agents to cease the solicitation of offers to purchase the Bank Notes in their
capacity as agents and to cease sales of the Bank Notes the Agents may then own
as principal, and the Bank will promptly prepare such amendment or supplement
as may be necessary to correct such untrue statement or omission. The Agents
shall, at such time as the Bank shall have furnished to the Agents an amended
or supplemented Offering Circular in form satisfactory to the Agents and their
counsel, resume solicitation of offers to purchase Bank Notes using the
Offering Circular so amended and supplemented. The Bank agrees to update the
Offering Circular no less than annually within 120 days after its fiscal
year-end.
(d) Suspension of Certain Obligations. The Bank shall not be
required to comply with the provisions of subsection (c) of this Section 4
during any period from the later of the time (i) the Agents shall have
suspended solicitation of purchases of the Bank Notes in their capacity as
agents pursuant to a request from the Bank and (ii) no Agent shall then hold
any Bank Notes purchased as principal pursuant hereto, until the time the Bank
shall determine that solicitation of purchases of the Bank Notes should be
resumed or the Agent shall subsequently purchase Bank Notes from the Bank as
principal.
(e) Regulatory Reports. The Bank shall provide the Agents with
copies of the publicly available portion of any reports required to be filed by
the Bank or the Parent with any United
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<PAGE> 12
States or state supervisory or regulatory authority as promptly as reasonably
practicable after such reports become publicly available.
(f) Preparation of Pricing Supplements. The Bank will prepare,
with respect to the Bank Notes to be sold through or to the Agents pursuant to
this Agreement, a pricing supplement with respect to the Bank Notes in a form
previously approved by the Agents.
(g) Blue Sky Qualifications. The Bank will endeavor, in cooperation
with the Agents, to qualify the Bank Notes for offering and sale under the
applicable securities laws of such states and other jurisdictions of the United
States as the Agents may designate, and will maintain such qualifications in
effect for as long as may be required for the distribution of the Bank Notes;
provided, however, that the Bank shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation in any
jurisdiction in which it is not so qualified. The Bank will file such
statements and reports as may be required by the laws of each jurisdiction in
which the Bank Notes have been qualified as above provided. The Bank will
promptly advise the Agents of the receipt by the Bank of any notification with
respect to the suspension of the qualification of the Bank Notes for sale in
any such state or jurisdiction or the initiating or threatening of any
proceeding for such purpose.
(h) Stand-Off Agreement. In connection with a purchase by an
Agent of Bank Notes as principal, between the date of the agreement to purchase
such Bank Notes and the Settlement Date with respect to such purchase, the Bank
will not, without the prior consent of the Agent who is party to such
agreement, offer or sell in the United States, or enter into any agreement to
sell in the United States, any debt securities or deposit obligations of the
Bank (other than the Bank Notes that are to be sold pursuant to such agreement
and deposit and other bank obligations issued and sold directly by the Bank in
the ordinary course of its business).
SECTION 5. Payment of Expenses.
Whether or not the transactions contemplated hereunder are consummated
or this Agreement or any agreement by an Agent to purchase Bank Notes as
principal is terminated, the Bank will pay all expenses incident to the
performance of the Bank's obligations under this Agreement including: (a) the
preparation, printing and delivery of the Offering Circular and all amendments
and supplements thereto; (b) the preparation of this Agreement; (c) the
preparation, issuance and delivery of the Bank Notes, including fees and
expenses related to the use of book-entry notes; (d) the fees and disbursements
of the Bank's counsel, of the Issuing and Paying Agent and of any calculation
agents or
12
<PAGE> 13
exchange rate agents; (e) the reasonable fees and disbursements of counsel to
the Agents incurred in connection with the establishment of the program
relating to the Bank Notes and incurred from time to time in connection with
the transactions contemplated thereby; (f) any fees charged by rating agencies
for rating of the Bank Notes; (g) any advertising and other out-of-pocket
expenses of the Agents incurred with the approval of the Bank; (h) the
qualification of the Bank Notes under state securities laws in accordance with
the provisions of Section 4(g) hereof, including the filing fees and the
reasonable fees and disbursements of counsel for the Agents in connection
therewith and in connection with the preparation of any Blue Sky Survey and any
Legal Investment Survey; and (i) the cost of preparing and providing any CUSIP
or other identification numbers for the Bank Notes.
SECTION 6. Conditions of Agents' Obligations.
The obligations of the Agents to solicit offers to purchase the Bank
Notes as agents of the Bank, the obligations of any purchasers of Bank Notes
sold through an Agent as agent, and any obligation of an Agent to purchase Bank
Notes pursuant to any agreement by such Agent to purchase Bank Notes as
principal (or otherwise), will be subject at all times to the accuracy in all
material respects of the representations and warranties on the part of the Bank
herein and to the accuracy in all material respects of the statements of the
Bank's and the Parent's officers made in any certificate furnished pursuant to
the provisions hereof, to the performance and observance in all material
respects by the Bank of all covenants and agreements herein contained and to
the following additional conditions precedent:
(a) Legal Opinions. On the date hereof, the Agents shall have
received the following legal opinions, dated as of the date hereof and in form
and substance satisfactory to the Agents:
(i) Opinions of Counsel to the Bank and the Parent. The
opinion of John G. Finneran, Jr., Counsel to the Bank and the Parent,
substantially in the form of Exhibit C.
(ii) Opinion of Counsel to the Agents. The opinion of Brown &
Wood, counsel to the Agents, covering such matters as they may
request.
(b) Officers' Certificates. On the date hereof and, if requested
by an Agent pursuant to Section 8(b) hereof, on each Settlement Date, the
Agents shall have received a certificate of (i) the President, Senior Vice
President or Vice President, and the Chief Financial or Chief Accounting
Officer of the Bank satisfactory to the Agents, substantially in the form of
Exhibit D hereto and (ii) the President or Vice President, and the Chief
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<PAGE> 14
Financial Officer, Chief Accounting Officer or Treasurer of the Parent
satisfactory to the Agents, substantially in the form of Exhibit E hereto, each
dated the date hereof or the Settlement Date, as the case may be.
(c) Representations Certificate. On the date hereof, the Agents
shall have received a certificate of the Parent, substantially in the form of
Exhibit F hereto.
(d) Accountants' Letter. On the date hereof, the Agents shall
have received a letter from Ernst & Young LLP, dated as of the date hereof and
in form and substance satisfactory to the Agents.
(e) Other Documents. On the date hereof and on each Settlement
Date, counsel to the Agents shall have been furnished with such documents and
opinions as such counsel may reasonably request for the purpose of enabling
such counsel to pass upon the issuance and sale of the Bank Notes as herein
contemplated and related proceedings, or in order to evidence the accuracy and
completeness of any of the representations and warranties, or the fulfillment
of any of the conditions, herein contained; and all proceedings taken by the
Bank in connection with the issuance and sale of Bank Notes as herein
contemplated shall be satisfactory in form and substance to the Agents and to
counsel to the Agents.
If any condition specified in this Section 6 shall not have been
fulfilled when and as required to be fulfilled, this Agreement (or, at the
option of the Agent, any applicable agreement by such Agent to purchase Bank
Notes as principal) may be terminated by the Agents by notice to the Bank at
any time at or prior to the Closing Time and any such termination shall be
without liability of any party to any other party, except that the provisions
of Section 5 hereof, the indemnity and contribution agreement set forth in
Sections 9 and 10 hereof, and the provisions of Sections 11, 14 and 15 hereof
shall remain in effect.
SECTION 7. Delivery of and Payment for Bank Notes Sold
through an Agent.
Delivery of Bank Notes sold through an Agent as agent shall be made by
the Bank to such Agent for the account of any purchaser only against payment
therefor in immediately available funds. In the event that a purchaser shall
fail either to accept delivery of or to make payment for a Bank Note on the
date fixed for settlement, the Agent shall promptly notify the Bank and deliver
the Bank Note to the Bank, and, if the Agent has theretofore paid the Bank for
the Bank Note, the Bank will promptly return such funds to the Agent. If such
failure shall have occurred for any reason other than default by the applicable
Agent to perform its obligations hereunder, the Bank will
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<PAGE> 15
reimburse such Agent on an equitable basis for its loss of the use of funds
during the period when the funds were credited to the account of the Bank.
SECTION 8. Additional Covenants of the Bank.
The Bank covenants and agrees with each Agent that:
(a) Reaffirmation of Representations and Warranties. Each
acceptance by the Bank of an offer for the purchase of Bank Notes (whether to
an Agent as principal or through the Agent as agent), and each delivery of Bank
Notes to the Agents, shall be deemed to be an affirmation that the
representations and warranties of the Bank contained in this Agreement and in
any certificate theretofore delivered to the Agents pursuant hereto are true
and correct in all material respects at the time of such acceptance or sale, as
the case may be, and an undertaking that such representations and warranties
will be true and correct in all material respects at the time of delivery to
the purchaser or his agent, or to the applicable Agent, of the Bank Note or
Bank Notes relating to such acceptance or sale, as the case may be, as though
made at and as of each such time (and it is understood that such
representations and warranties shall relate to the Offering Circular as amended
and supplemented to each such time, including any amendment resulting from the
incorporation by reference of documents filed by the Bank or the Parent).
(b) Subsequent Delivery of Certificates. Each time that (i) the
Offering Circular shall be amended or supplemented (other than by an amendment
or supplement providing solely for a change in the interest rates or other
variable terms of Bank Notes), (ii) there is filed with the Commission or any
bank regulatory agency any document incorporated by reference into the Offering
Circular, (iii) (if required in connection with the purchase of Bank Notes by
an Agent as principal) the Bank sells Bank Notes to such Agent as principal or
(iv) the Bank issues and sells Bank Notes in a form not previously certified to
the Agents by the Bank, the Bank shall furnish or cause to be furnished
forthwith to the Agents certificates from the Bank and the Parent dated the
date of such amendment or supplement, the date of such filing, or the
Settlement Date, as the case may be, to the effect that the statements
contained in the certificates which were last furnished to the Agents by the
Bank and the Parent pursuant to Section 6(b) hereof are true and correct in all
material respects at the time of such amendment, supplement or sale, as the
case may be, as though made at and as of such time (except that such statements
shall be deemed to relate to the Offering Circular as amended and supplemented
to such time, including any amendment resulting from incorporation by reference
of documents filed by the Bank and the Parent) or, in lieu of such
certificates, certificates of the same form as the certificates referred to in
said Section 6(b), modified as necessary to relate to the
15
<PAGE> 16
Offering Circular as amended and supplemented to the time of delivery of such
certificates.
(c) Subsequent Delivery of Legal Opinions. Each time that (i) the
Offering Circular shall be amended or supplemented with respect to the Bank
Notes (other than by an amendment or supplement (x) providing solely for a
change in interest rates or other variable terms of the Bank Notes or similar
changes, or (y) setting forth financial statements or other information as of
and for a fiscal period (unless, in the reasonable judgment of the Agents, an
opinion of counsel should be furnished in light of such an amendment)), (ii)
there is filed with the Commission any document incorporated by reference into
the Offering Circular, (iii) (if required in connection with the purchase of
Bank Notes by an Agent as principal) the Bank sells Bank Notes to such agent as
principal or (iv) the Bank issues and sells Bank Notes in a form not previously
certified to the Agents by the Bank, the Bank shall furnish or cause to be
furnished forthwith to the Agents and the Agents' counsel a letter from each
counsel last furnishing an opinion referred to in Section 6(a)(i) hereof (or
such other counsel as may be acceptable to the Agents) to the effect that the
Agents may rely on such last opinion to the same extent as though it were dated
the date of such letter authorizing reliance (except that statements in such
last opinion shall be deemed to relate to the Offering Circular as amended and
supplemented to the time of delivery of such letter authorizing reliance) or in
lieu of such letter, each such counsel (or such other counsel as may be
acceptable to the Agents) may deliver a letter in the same form as its letter
referred to in Section 6(a)(i) but modified, as necessary to relate to the
Offering Circular as amended and supplemented to the time of delivery of such
letter.
(d) Subsequent Delivery of Accountants' Letters. Each time that
(i) the Offering Circular shall be amended or supplemented with respect to the
Bank Notes (other than by an amendment or supplement (x) providing solely for a
change in interest rates or other variable terms of the Bank Notes, or (y)
setting forth financial statements or other information as of and for a fiscal
period (unless, in the reasonable judgment of the Agents, an opinion of counsel
should be furnished in light of such an amendment)), (ii) (if required by an
Agent) there is filed with the Commission any document incorporated by
reference into the Offering Circular, (iii) (if required in connection with the
purchase of Bank Notes by an Agent as principal) the Bank sells Bank Notes to
such agent as principal or (iv) (if required by an Agent) the Bank issues and
sells Bank Notes in a form not previously certified to the Agents by the Bank,
the Bank shall furnish or cause to be furnished forthwith to the Agents and the
Agents' counsel a letter from Ernst & Young LLP reaffirming the statements made
in its letter delivered pursuant to Section 6(d), or in lieu of such letter,
Ernst & Young LLP may deliver a letter in the same form as its letter referred
to in Section 6(d) but
16
<PAGE> 17
modified as necessary to relate to the Offering Circular as amended and
supplemented to the time of delivery of such letter.
SECTION 9. Indemnification.
(a) Indemnification of Agents. The Bank agrees to indemnify and
hold harmless each Agent and each person, if any, who controls each Agent
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Offering Circular (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of
the Bank;
(iii) against any and all expense whatsoever (including the
reasonable fees and disbursements of counsel chosen by the Agents), as
reasonably incurred in investigating, preparing or defending against
any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based
upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid
under (i) or (ii) above; and
(iv) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of the breach by the
Bank of any agreement or representation made or deemed to be made
pursuant to this Agreement.
(b) Indemnification of Bank. Each Agent agrees, severally and not
jointly, to indemnify and hold harmless the Bank and each person, if any, who
controls the Bank within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act against any and all loss, liability, claim, damage and
expense described in the indemnity contained in subsection (a) of this Section,
as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Offering Circular (or any
amendment or supplement thereto) in
17
<PAGE> 18
reliance upon and in conformity with written information furnished to the Bank
by such Agent expressly for use in the Offering Circular (or any amendment or
supplement thereto).
(c) General. Each indemnified party shall give prompt notice to
each indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability which it may
have otherwise than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of such action. In no
event shall the indemnifying parties be liable for the fees and expenses of
more than one counsel (in addition to any local counsel) for all indemnified
parties in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances.
SECTION 10. Contribution.
In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 9 hereof
is for any reason held to be unavailable to or insufficient to hold harmless
the indemnified parties although applicable in accordance with its terms, the
Bank, on the one hand, and the Agents, on the other hand, shall contribute to
the aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by said indemnity agreement incurred by the Bank, on the one hand,
and the Agents, on the other hand, as incurred, in such proportions that each
Agent is responsible for that portion represented by the percentage that the
total commissions and underwriting discounts received by such Agent to the date
of such liability bears to the total sales price received by the Bank from the
sale of Bank Notes to the date of such liability, and the Bank is responsible
for the balance; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section, each person, if
any, who controls the Agents within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act shall have the same rights to contribution as the
Agents, and each person, if any, who controls the Bank within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the Bank. The obligations of each of the Agents and
the Bank under this Section to contribute are several in proportion to the
respective purchases or sales made by or through it to which such loss, claim,
damage or liability (or action in respect thereof) relates and are not joint.
18
<PAGE> 19
SECTION 11. Representations, Warranties and Agreements to
Survive Delivery.
All representations, warranties and agreements contained in this
Agreement or contained in certificates of officers of the Bank pursuant hereto,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Agents or any controlling person of
an Agent, or by or on behalf of the Bank, and shall survive each delivery of
and payment for any of the Bank Notes.
SECTION 12. Termination.
(a) Termination of this Agreement. This Agreement (excluding any
agreement hereunder by an Agent to purchase Bank Notes as principal) may be
terminated for any reason, at any time by either the Bank or any of the Agents
as to itself, immediately upon the giving of 30 days written notice of such
termination to the other party hereto in accordance with the provisions of
Section 13 hereof.
(b) Termination of an Agreement to Purchase Bank Notes as
Principal. An Agent may terminate an agreement hereunder by such Agent to
purchase Bank Notes as principal, immediately upon notice to the Bank, at any
time prior to the Settlement Date relating thereto (i) if there has been, since
the date of such agreement or since the respective dates as of which
information is given in the Offering Circular, any material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Bank and its subsidiaries, or of the Parent and its
subsidiaries, as the case may be, considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there shall have
occurred any material adverse change in the financial markets in the United
States or any outbreak or escalation of hostilities or other national or
international calamity or crisis the effect of which is such as to make it, in
the judgment of such Agent, impracticable to market the Bank Notes or enforce
contracts for the sale of the Bank Notes, or (iii) if trading in any securities
of the Bank or the Parent shall have been suspended by the Commission or a
national securities exchange, or if trading generally on either the American
Stock Exchange, the New York Stock Exchange or the Chicago Board of Trade shall
have been suspended, or minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been required, by
either of said exchanges or by order of the Commission or any other
governmental authority, or if a banking moratorium shall have been declared by
either federal, New York State or the Commonwealth of Virginia authorities, as
the case may be, or (iv) if the rating assigned by any nationally recognized
securities rating agency to any debt securities of the Bank as of the date of
any agreement by an Agent to purchase the
19
<PAGE> 20
Bank Notes as principal shall have been lowered since that date or if any such
rating agency shall have publicly announced that it has placed under
surveillance or review, other than with positive implications, its rating of
any debt securities or deposits of the Bank, or (v) if there shall have come to
such Agent's attention any facts that would cause such Agent to believe that
the Offering Circular or any amendments thereto or supplements thereof, at the
time it was required to be delivered to a purchaser of Bank Notes, contained an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the
circumstances existing at the time of such delivery, not misleading.
(c) General.
In the event of any such termination, none of the parties will have
any liability to the other parties hereto, except that (i) the Agents shall be
entitled to any commissions earned in accordance with the third paragraph of
Section 3(b) hereof, (ii) if at the time of termination (a) an Agent shall own
any Bank Notes purchased with the intention of reselling them or (b) an offer
to purchase any of the Bank Notes has been accepted by the Bank but the time of
delivery to the purchaser or his agent of the Bank Note or Bank Notes relating
thereto has not occurred, the covenants set forth in Sections 4 and 8 hereof
shall remain in effect until such Bank Notes are so resold or delivered, as the
case may be, and (iii) the provisions of Section 5 hereof, the indemnity and
contribution agreements set forth in Sections 9 and 10 hereof, and the
provisions of Section 11, 14 and 15 hereof shall remain in effect.
SECTION 13. Notices.
Unless otherwise provided herein, all notices required under the terms
and provisions hereof shall be in writing, either delivered by hand, by mail or
by telex, telecopier or telegram, and any such notice shall be effective when
received at the address specified below.
If to the Bank:
Capital One Bank
2980 Fairview Park Drive
Falls Church, Virginia 22042-4525
Attention: Treasurer
Facsimile Number: (703) 205-1093
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<PAGE> 21
If to the Parent:
Capital One Financial Corporation
2980 Fairview Park Drive
Falls Church, Virginia 22042-4525
Attention: Chief Financial Officer
Facsimile Number: (703) 205-1093
If to Merrill, Lynch & Co.:
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower, 10th Floor
World Financial Center
New York, New York 10281-1310
Attention: Product Management-Bank Notes
Facsimile Number: (212) 449-2234
If to CS First Boston Corporation:
CS First Boston Corporation
55 East 52nd Street
New York, New York 10055
Attention: Short and Medium-Term Finance Department
Facsimile Number: (212) 318-1498
If to Donaldson, Lufkin & Jenrette Securities:
Donaldson, Lufkin & Jenrette
Securities Corporation
140 Broadway, 40th Floor
New York, New York 10005
Attention: Roger Thomson
Facsimile Number: (212) 504-8244
If to Goldman, Sachs & Co.:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Medium-Term Note Desk
Facsimile Number: (212) 902-0658
If to J.P. Morgan Securities Inc.:
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Attention: Medium-Term Note Desk
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<PAGE> 22
Facsimile Number: (212) 648-5909
If to Lehman Brothers Inc.:
Lehman Brothers
Lehman Brothers Inc.
3 World Financial Center, 12th Floor
New York, New York 10285-1200
Attention: Medium-Term Note Department
Facsimile Number: (212) 528-1718
If to Salomon Brothers Inc:
Salomon Brothers Inc
7 World Trade Center, 31st Floor
New York, New York 10048
Attention: Medium-Term Note Department
Facsimile Number: (212) 783-2274
If to Smith Barney Inc.:
Smith Barney Inc.
390 Greenwich Street
New York, New York 10013
Attention: Continously Offered Products Group
Facsimile Number: (212) 723-8854
or at such other address as such party may designate from time to time by
notice duly given in accordance with the terms of this Section 13.
SECTION 14. Parties.
This Agreement shall inure to the benefit of and be binding upon the
Agents, the Bank and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the parties hereto and their respective
successors and the controlling persons and officers and directors referred to
in Sections 9 and 10 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein or therein contained. This Agreement and all conditions and
provisions hereof and thereof are intended to be for the sole and exclusive
benefit of the parties hereto and respective successors and said controlling
persons and officers and directors and their heirs and legal representatives,
and for the benefit of no other person, firm or
22
<PAGE> 23
corporation. No purchaser of Bank Notes shall be deemed to be a successor by
reason merely of such purchase.
SECTION 15. Governing Law.
This Agreement and all the rights and obligations of the parties shall
be governed by and construed in accordance with the laws of New York applicable
to agreements made and to be performed in such state. Any suit, action or
proceeding brought by the Bank or the Parent in connection with or arising
under this Agreement shall be brought solely in the state or federal court of
appropriate jurisdiction located in the Borough of Manhattan, The City of New
York.
SECTION 16. Counterparts.
This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with the your understanding of our
agreement, please sign and return to the Bank a counterpart hereof, whereupon
this instrument along with all counterparts will become a binding agreement
between each of the Agents and the Bank in accordance with its terms.
Very truly yours,
CAPITAL ONE BANK
By: /s/ DAVID M. WILLEY
---------------------------------
Name: David M. Willey
Title: Vice President
Cashier, Treasurer
and Assistant Secretary
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By:/s/ MARION NEUSTADTER
----------------------------------
Name:
Title:
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<PAGE> 24
CS FIRST BOSTON CORPORATION
By:/s/ MARTHA D. BAILEY
----------------------------------
Name: Martha D. Bailey
Title: Vice President
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: [sig]
----------------------------------
Name:
Title:
GOLDMAN, SACHS & CO.
By: /s/ GOLDMAN, SACHS & CO.
----------------------------------
Name:
Title:
J.P. MORGAN SECURITIES INC.
By:/s/ GEOFFREY B. FITZGERALD
----------------------------------
Name:
Title:
LEHMAN BROTHERS INC.
By: [sig]
----------------------------------
Name:
Title:
SALOMON BROTHERS INC
By: [sig]
----------------------------------
Name:
Title:
SMITH BARNEY INC.
By: [sig]
----------------------------------
Name:
Title:
24
<PAGE> 25
EXHIBIT A
The following terms, if applicable, shall be agreed to by the Agent
and the Bank in connection with each sale of Bank Notes to the Agent as
principal:
Principal Amount: $_______
Choose One:
/ / Short-Term Senior Bank Note
/ / Medium-Term Senior Bank Note
/ / Subordinated Bank Note
Interest Rate:
If Fixed Rate Note:
Interest Rate:
Record Date(s):
Interest Payment Date(s):
If Floating Rate Note:
Interest Rate Basis:
Initial Interest Rate:
Spread or Spread Multiplier, if any:
Interest Rate Reset Month(s):
Interest Reset Date(s):
Interest Payment Date(s):
Index Maturity:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Interest Reset Period:
Interest Payment Period:
Calculation Agent:
If Redeemable:
Initial Redemption Date:
Additional Redemption Dates:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction:
If Repayable:
Optional Repayment Date(s):
Date of Maturity:
Purchase Price: ___________%
A-1
<PAGE> 26
Settlement Date and Time:
Additional Terms:
Also, in connection with the purchase of Bank Notes by the Agent as principal,
agreement as to whether the following will be required:
(a) Officers' Certificates pursuant to Section 8(b) of
the Distribution Agreement.
(b) Legal Opinion pursuant to Section 8(c) of the
Distribution Agreement.
(c) Accountants' Letter pursuant to Section 8(d) of the
Distribution Agreement.
A-2
<PAGE> 27
EXHIBIT B
As compensation for the services of the Agents hereunder, the Bank
shall pay the applicable Agent, on a discount basis, a commission for the sale
of each Bank Note equal to the principal amount of the Bank Note multiplied by
the appropriate percentage set forth below:
<TABLE>
<CAPTION>
PERCENT OF
MATURITY RANGES PRINCIPAL AMOUNT
- --------------- ----------------
<S> <C>
From 30 days to less than 9 months............ .050%
From 9 months to less than 1 year............. .125
From 1 year to less than 18 months............ .150
From 18 months to less than 2 years........... .200
From 2 years to less than 3 years............. .250
From 3 years to less than 4 years............. .350
From 4 years to less than 5 years............. .450
From 5 years to less than 6 years............. .500
From 6 years to less than 7 years............. .550
From 7 years to less than 10 years............ .600
From 10 years to less than 15 years........... .625
From 15 years to less than 20 years........... .700
From 20 years to 30 years..................... .750
</TABLE>
B-1
<PAGE> 28
[FORM OF OPINION OF COUNSEL TO THE BANK AND THE PARENT]
EXHIBIT C
April 30, 1996
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CS FIRST BOSTON CORPORATION
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
LEHMAN BROTHERS
LEHMAN BROTHERS INC.
SALOMON BROTHERS INC
SMITH BARNEY INC.
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower
New York, New York 10281
Ladies and Gentlemen:
I have acted as counsel for Capital One Bank (the "Bank") and
Capital One Financial Corporation (the "Parent"), in connection with the
execution today (i) by you and the Bank of the Amended and Restated
Distribution Agreement (the "Distribution Agreement"), (ii) by the Parent of
the Representations Certificate pursuant to Section 6(c) of the Distribution
Agreement (the "Representations Certificate"), and (iii) by the Bank and
Chemical Bank (the "Issuing and Paying Agent") of the Amended and Restated
Issuing and Paying Agency Agreement (the "IPA Agreement") and the Amended and
Restated Interest Calculation Agreement (the "Interest Calculation Agreement")
and (iv) by the Bank and the Issuing and Paying Agent and The Depository Trust
Company of the Short-Term and Medium-Term Letters of Representations (the
"Letters of Representations"), all of which are dated April 30, 1996, relating
to the issuance and sale by the Bank of its Senior Bank Notes due from 30 days
to 30 years from the date of issue (the "Senior Bank Notes") and Subordinated
Bank Notes due from five years to 30 years from the date of issue (the
"Subordinated Bank Notes," and together with the Senior Bank Notes, the "Bank
C-1
<PAGE> 29
Notes"). This opinion letter is furnished pursuant to Section 6(a)(i) of the
Distribution Agreement. Capitalized terms used herein and not otherwise
defined have the meanings set forth in the Distribution Agreement.
In arriving at the opinions expressed below, I have examined
and relied on the following documents:
(a) an executed copy of the Distribution Agreement, the
Representations Certificate, the IPA Agreement and
the Interest Calculation Agreement;
(b) the Offering Circular;
(c) specimens of the Bank Notes; and
(d) the documents delivered to you by the Bank and the
Parent at the closing pursuant to the Distribution
Agreement.
In addition, I have examined and relied on the originals or copies certified or
otherwise identified to my satisfaction of all such corporate records of the
Bank and the Parent and such other instruments and other certificates of public
officials, officers and representatives of the Bank and the Parent and such
other persons, and I have made such investigations of law, as I have deemed
appropriate as a basis for the opinions expressed below. In rendering the
opinions expressed below, I have assumed and have not verified that the
signatures on all documents that I have examined are genuine, that all copies
of documents that I have examined conform to the originals thereof, and that
the Bank Notes conform to the specimen thereof that I have examined.
Based on the foregoing, it is my opinion that:
1. The Bank is a banking corporation validly existing
and in good standing under the laws of the Commonwealth of Virginia.
The Parent is a corporation validly existing and in good standing
under the laws of the State of Delaware and is qualified to do
business as a foreign corporation in the Commonwealth of Virginia.
The Bank is a wholly-owned subsidiary of the Parent, which has
securities registered under the Securities Exchange Act of 1934, as
amended.
2. The Distribution Agreement, the IPA Agreement, the
Interest Calculation Agreement and the Letters of Representations have
been duly authorized, executed and delivered by the Bank and, assuming
due authorization, execution and delivery by all parties thereto other
than the Bank, are legal, valid, binding and enforceable agreements of
the Bank, subject to applicable bankruptcy, liquidation, insolvency,
fraudulent transfer, reorganization, moratorium, conservatorship,
receivership, and similar laws of general applicability relating to,
or affecting, creditors' rights and subject, as to enforceability, to
general principles of
C-2
<PAGE> 30
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law), and subject, as to any indemnification or
contribution obligation, to public policies which might affect such
obligations.
3. The Representations Certificate has been duly
authorized, executed and delivered by a duly authorized officer of the
Parent and, assuming due authorization, execution and delivery of the
Distribution Agreement, the IPA Agreement and the Interest Calculation
Agreement by all parties thereto other than the Bank, is a legal,
valid, binding and enforceable agreement of the Parent, subject to
applicable bankruptcy, liquidation, insolvency, fraudulent transfer,
reorganization, moratorium, conservatorship, receivership and similar
laws of general applicability relating to, or affecting, creditors'
rights and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law), and subject, as to any indemnification or
contribution obligation, to public policies which might affect such
obligations.
4. The Bank Notes have been duly authorized for issuance
and sale pursuant to the Distribution Agreement and, when issued and
authenticated against payment of the consideration therefor, the Bank
Notes will be legal, valid, binding and enforceable obligations of the
Bank, subject to applicable bankruptcy, liquidation, insolvency,
fraudulent transfer, reorganization, moratorium, conservatorship,
receivership, and similar laws of general applicability relating to,
or affecting creditors rights and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law).
5. The execution, issuance and delivery by the Bank of
the Bank Notes, the execution, delivery and performance by the Bank of
the Distribution Agreement, the IPA Agreement, the Interest
Calculation Agreement, the Letters of Representation and any agreement
by an agent party to the Distribution Agreement to purchase the Bank
Notes as principal, and the execution, delivery and performance by the
Parent of the Representations Certificate, do no violate any law,
rule, regulation, order, judgment or decree applicable to the Parent
and its subsidiaries or the Bank and its subsidiaries, if any, or
violate any provision of each of the Bank's or the Parent's Charter,
Bylaws, or Articles of Incorporation or Articles of Association, as
the case may be, or, conflict with or result in a material breach of
or constitute a material default under, or result in the creation or
imposition of any material lien, charge or encumbrance upon any
property or assets of the Parent and
C-3
<PAGE> 31
its subsidiaries or the Bank and its subsidiaries, if any, pursuant to
any contract, indenture, mortgage, loan agreement, note, lease or
other instrument known to me to which the Parent or any of its
subsidiaries or the Bank and its subsidiaries if any, or the property
of any of them, is bound or subject.
6. The Bank Notes are exempt from registration under
Section 3(a)(2) of the Securities Act of 1933, as amended (the "1933
Act"), and neither registration of the Bank Notes under the 1933 Act,
nor qualification of an indenture under the Trust Indenture Act of
1939, as amended, will be required in connection with the offer, sale,
issuance or delivery of the Bank Notes pursuant to the Distribution
Agreement or any applicable agreement by an agent party to the
Distribution Agreement to purchase the Bank Notes as principal.
7. The Bank is not required to register under the
provisions of the Investment Company Act of 1940, as amended (the
"Investment Company Act").
8. No consent, approval or authorization of or filing
with any Federal or Virginia governmental body or agency is required
for the performance by the Bank of its obligations under the
Distribution Agreement, the IPA Agreement, the Interest Calculation
Agreement and any applicable agreement by an agent party to the
Distribution Agreement to purchase the Bank Notes as principal or the
Bank Notes, except such as may be required by the securities or Blue
Sky laws of the various states in connection with the offer and sale
of the Bank Notes.
9. The Bank Notes conform in all material respects to
the description thereof contained in the Offering Circular under the
caption "Description of Notes."
10. The Senior Bank Notes are unsecured and
unsubordinated debt obligations of the Bank, and rank pari passu with
all other unsecured and unsubordinated debt obligations of the Bank
except, (A) pursuant to Section 11(d)(11) of the Federal Deposit
Insurance Act, the Bank's unsecured deposit obligations and (B)
pursuant to Section 6.1 - 110.9 of the Code of Virginia, the Bank's
deposit obligations. The Subordinated Notes are unsecured and
subordinated debt obligations of the Bank, rank pari passu among
themselves, and are subordinate and junior in right of payment to the
Bank's obligations to the depositors and general creditors, other than
obligations which, by their express terms, rank on a parity with or
junior to such Subordinated Bank Notes. Upon issuance, the
Subordinated
C-4
<PAGE> 32
Bank Notes will qualify as Tier 2 capital of the Bank (within the
meaning of Appendix A to 12 C.F.R. Part 208).
11. Except as may be set forth in the Offering Circular,
there is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to
my knowledge, threatened against or affecting, the Parent or any of
its subsidiaries or the Bank and its subsidiaries, if any, which if
determined adversely to the Parent or any of its subsidiaries or the
Bank and its subsidiaries, as the case may be, could reasonably be
expected to result in any material adverse change in the financial
condition, or in the earnings or business affairs of the Parent and
its subsidiaries, taken as a whole, or the Bank and its subsidiaries,
taken as a whole, or could reasonably be expected to materially and
adversely affect the consummation of the Distribution Agreement, the
IPA Agreement, the Interest Calculation Agreement or the Bank Notes or
any transaction contemplated hereby or thereby.
Because the primary purpose of my role in the transaction was not to
establish or confirm factual matters or financial, accounting or statistical
matters and because of the wholly or partially non-legal character of many of
the statements contained in the Offering Circular, I am not passing upon and do
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Offering Circular and I make no representation that
I have independently verified the accuracy, completeness or fairness of such
statements. Without limiting the foregoing, I assume no responsibility for,
and have not independently verified, the accuracy, completeness or fairness of
the financial statements and schedules and other financial and statistical data
included in the Offering Circular, and I have not examined the accounting,
financial or statistical records from which such financial statements,
schedules and data are derived. I note that, while certain portions of the
Offering Circular (including financial statements and schedules) have been
included therein on the authority of "experts" within the meaning of the
Securities Act of 1933, as amended, I am not such an expert with respect to any
portion of the Offering Circular, including without limitation such financial
statements or schedules or the other financial or statistical data included
therein.
However, in the course of my acting as counsel to the Bank in
connection with its preparation of the Offering Circular and the offering of
the Bank Notes, prior to the date of the Offering Circular, I participated in
conferences and in telephone conversations with representatives of the Bank,
Ernst & Young, accountants for the Bank, your representatives and your counsel,
C-5
<PAGE> 33
during which conferences and conversations the contents of the Offering
Circular and related matters were discussed. In addition, I reviewed certain
corporate documents furnished to me by the Bank or otherwise in my possession,
including the minutes of the stockholders and the Board of Directors of the
Bank, which minutes are all such minutes with respect to the Bank since the
date of its incorporation.
Based on my participation in the above-mentioned conferences and
conversations, my review of the documents described above, my understanding of
applicable law and the experience I have gained in my practice thereunder, I
advise you that no information has come to my attention that causes me to
believe that the Offering Circular (other than the financial statements and
schedules and other financial and statistical data included therein and the
information included therein in the last paragraph of the cover page of the
offering circular and under the caption "Certain United States Federal Income
Tax Considerations" and "Plan of Distribution", as to which I express no view)
as of the date thereof or hereof, contained or contains an untrue statement of
a material fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
For purposes of the opinion contained in paragraph 11 above, I
have not regarded any action, suit or proceeding to be "threatened" unless the
potential litigant or governmental authority has manifested to the management
of the Bank or the Parent or to me a present intention to initiate such action,
suit or proceeding.
I express no opinion other than as to the federal law of the
United States of America, the law of the Commonwealth of Virginia and the
general corporation law of the State of Delaware.
I am furnishing this opinion letter to you solely for your
benefit. This opinion letter is not to be used, circulated, quoted or
otherwise referred to for any other purpose, except that Brown & Wood may rely
upon this opinion letter to the same extent as if it were addressed to it for
purposes of rendering its opinion to you on the date hereof.
Very truly yours,
C-6
<PAGE> 34
EXHIBIT D
[THE BANK]
OFFICERS' CERTIFICATE
We, [Officers' Names], [Officers' Titles], respectively, of Capital One
Bank, a banking association duly organized and validly existing in good
standing under the laws of the Commonwealth of Virginia (the "Bank"), pursuant
to Section 6(b)(i) of the Amended and Restated Distribution Agreement, dated
April 30, 1996 (the "Distribution Agreement"), among each of the Bank, Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, CS First
Boston Corporation, Donaldson, Lufkin & Jenrette Securities Corporation,
Goldman, Sachs & Co., J.P. Morgan Securities Inc., Lehman Brothers, Lehman
Brothers Inc. (including its affiliate Lehman Commercial Paper Inc.), Salomon
Brothers Inc and Smith Barney Inc., hereby certify that:
(i) Since [ ], 1996, there has been no material adverse change in the
condition, financial or otherwise, of the Bank and its subsidiaries considered
as one enterprise, or in the business affairs, earnings or business prospects
of the Bank and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business other than as set forth or
contemplated in the Offering Circular, dated April 30, 1996, as amended or
supplemented to the date hereof, relating to the Bank's Bank Notes;
(ii) The other representations and warranties of the Bank contained in
Section 2 of the Distribution Agreement are true and correct in all material
respects with the same force and effect as though expressly made at and as of
the date hereof; and
(iii) The Bank has performed or complied with the Distribution Agreement
and with all agreements and documentation executed in connection therewith and
satisfied in all material respects all conditions on its part to be performed
or satisfied at or prior to the date hereof.
IN WITNESS WHEREOF, we have hereunto signed our names and affixed the seal
of the Bank this 30, day of April, 1996.
By:
------------------------------
Name:
Title:
[SEAL]
By:
------------------------------
Name:
Title:
<PAGE> 35
EXHIBIT E
[PARENT]
Officers' Certificate
We, [Officers' Names], [Officers' Titles], respectively, of Capital One
Financial Corporation, a corporation organized under the laws of the State of
Delaware (the "Parent"), pursuant to Section 6(b)(ii) of the Amended and
Restated Distribution Agreement, dated April 30, 1996, (the "Distribution
Agreement"), among each of Capital One Bank, Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, CS First Boston Corporation,
Donaldson, Lufkin & Jenrette Securities Corporation, Goldman, Sachs & Co., J.P.
Morgan Securities Inc., Lehman Brothers, Lehman Brothers Inc. (including its
affiliate Lehman Commercial Paper Inc.), Salomon Brothers Inc and Smith Barney
Inc. (collectively, the "Agents") hereby certify that:
1. Since [ ], 1996, there has been no material adverse change in the
condition, financial or otherwise, of the Bank and its subsidiaries or the
Parent and its subsidiaries, as the case may be, considered as one enterprise,
or in the business affairs, earnings or business prospects of the Bank and its
subsidiaries, as the case may be, considered as one enterprise, whether or not
arising in the ordinary course of business other than as set forth or
contemplated in the Offering Circular, dated April 30, 1996, as amended or
supplemented to the date hereof, relating to the Banks' Bank Notes;
2. The representations and warranties of the Parent contained in the
Representation Certificate dated April 30, 1996, furnished by the Parent to the
Agents pursuant to Section 6(c) of the Distribution Agreement are true and
correct in all material respects with the same force and effect as though
expressly made at and as of the date hereof; and
E-1
<PAGE> 36
3. The Parent has performed or complied in all material respects with the
Distribution Agreement and with all agreements and documentation executed in
connection therewith and satisfied in all material respects all conditions on
its part to be performed or satisfied at or prior to the date hereof.
IN WITNESS WHEREOF, we have hereunto signed our names and affixed the seal
of the Parent the 30th day of April, 1996.
By:
------------------------------
Name:
Title:
[SEAL]
By:
------------------------------
Name:
Title:
E-2
<PAGE> 37
EXHIBIT F
REPRESENTATIONS CERTIFICATE OF CAPITAL ONE FINANCIAL CORPORATION
To induce Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, CS First Boston Corporation, Donaldson, Lufkin & Jenrette
Securities Corporation, Goldman, Sachs & Co., J.P. Morgan Securities Inc.,
Lehman Brothers, Lehman Brothers Inc. (including its affiliate Lehman
Commercial Paper Inc.), Salomon Brothers Inc and Smith Barney Inc. (each
referred to as an "Agent" and collectively referred to as the "Agents") to
enter into the Amended and Restated Distribution Agreement of even date
herewith (the "Distribution Agreement") among each of Capital One Bank (the
"Bank"), and the Agents and to induce Chemical Bank to enter into the Amended
and Restated Issuing and Paying Agency Agreement (the "IPA Agreement") between
the Bank and Chemical Bank with respect to the issue and sale by the Bank of
its Bank Notes (the "Bank Notes"), the undersigned, [Officers' Names],
[Officers' Titles in accordance with Section 6(c) of the Distribution
Agreement] of Capital One Financial Corporation (the "Parent"), hereby
represent and warrant on behalf of the Parent to each Agent and to Chemical
Bank as of the date hereof, as of each time that there is filed with the
Securities and Exchange Commission (the "Commission") any document relating to
the Parent incorporated by reference in the Offering Circular, as of the date
of each acceptance by the Bank of an offer for the purchase of Bank Notes
(whether by an Agent as principal or through such Agent as agent), as of each
applicable Settlement Date and as of each applicable Representation Date, as
follows:
(i) Authorization to Incorporate by Reference. The Parent has
authorized the Bank to incorporate by reference in the Offering Circular
its annual reports on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K, and each other document filed by the Corporation
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act") filed by the Parent
with the Commission pursuant to the Exchange Act and the rules and
regulations thereunder (the "Incorporated Documents").
(ii) Incorporated Documents. The Incorporated Documents, at the
time they were or hereafter are filed with the applicable federal
regulatory authorities, complied or when so filed will comply, as the case
may be, in all material respects with the requirements of the 1934 Act and
the rules and regulations promulgated thereunder or the rules and
regulations otherwise applicable thereto, as the case may be, and, when
read together with the other information in the
F-1
<PAGE> 38
Offering Circular, did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were or are made, not misleading.
(iii) Due Organization, Valid Existence and Good Standing. The Parent
is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and is licensed, registered or
qualified to conduct the business in which it is engaged in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such license, registration or qualification,
except to the extent that the failure to be so licensed, registered or
qualified or to be in good standing would not have a material adverse
effect on the Parent and its subsidiaries taken as a whole.
(iv) No Material Adverse Change. Since the respective dates as of
which information is given in the Offering Circular, there has not been any
material adverse change, or any development which could be expected to
result in a material adverse change, in the condition, financial or
otherwise, or in the business affairs, earnings or business prospects of
the Bank and its subsidiaries, considered as one enterprise, or the Parent
and its subsidiaries, considered as one enterprise, whether or not arising
in the ordinary course of business, other than as set forth or contemplated
in the Offering Circular.
In addition, to induce the Agents to enter into the Distribution Agreement,
the Parent agrees to indemnify and hold harmless each Agent and each person, if
any, who controls each Agent within the meaning of Section 15 of the Securities
Act of 1933, as amended (the "1933 Act") or Section 20 of the 1934 Act (each, a
"Controlling Person") to the same extent and upon the same terms that the Bank
agree to indemnify and hold harmless each Agent and each such Controlling
Person in Section 9(a) of the Distribution Agreement and each such person and
to contribute to the payment of any losses, liabilities, claims, damages or
expenses incurred by each Agent or each such Controlling Person to the same
extent and upon the same terms that the Bank agrees to contribute in Section 10
of the Distribution Agreement.
All representations and warranties contained in this certificate shall
remain operative and in full force and effect, regardless of any investigation
made by or on behalf of the Agents or any Controlling Person of the Agents, or
by or on behalf of the Parent and shall survive each delivery of and payment
for any of the Bank Notes.
All terms used herein but not otherwise defined shall have the meanings
assigned to such terms in the Distribution Agreement.
F-2
<PAGE> 39
IN WITNESS WHEREOF, I have hereunto signed my name on behalf of the Parent
this 30th day of April, 1996.
By:
-----------------------------
Name:
Title:
F-3
<PAGE> 40
EXHIBIT G
ADMINISTRATIVE PROCEDURES
G-1
<PAGE> 41
AMENDED AND RESTATED ADMINISTRATIVE PROCEDURES
FOR FIXED RATE AND FLOATING RATE BANK NOTES
With maturities from 30 days to 30 years
(Dated as of April 30, 1996)
Short-Term Senior Bank Notes ("Short-Term Senior Notes"), Medium-Term
Senior Bank Notes ("Medium-Term Senior Notes," and together with the Short-Term
Senior Notes, the "Senior Notes") and Subordinated Bank Notes (the
"Subordinated Notes," and together with the Senior Notes, the "Notes") are to
be offered on a continuous basis for sale by Capital One Bank (the "Bank")
through each of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, CS First Boston Corporation, Goldman, Sachs & Co., J.P. Morgan
Securities Inc., Lehman Brothers, Lehman Brothers Inc. (including its
affiliates Lehman Commercial Paper Inc. and Lehman Government Securities Inc.),
Salomon Brothers Inc and Smith Barney Inc. who, as agents (each, an "Agent"
and, collectively, the "Agents"), will utilize its reasonable efforts on an
agency basis to solicit offers to purchase the Notes at 100% of the principal
amount thereof. If agreed to by the Bank and the applicable Agent, such Agent
will purchase the Notes, as principal from the Bank for resale to investors and
other purchasers at varying prices relating to prevailing market prices at the
time of resale as determined by the applicable Agent or, if so specified in the
applicable Pricing Supplement, for resale at a fixed public offering price.
Only those provisions in these Administrative Procedures that are applicable to
the particular role that an Agent will perform shall apply.
The Notes are being sold pursuant to a distribution agreement (the
"Distribution Agreement"), dated April 30, 1996, between the Bank and the
Agents. The Distribution Agreement provides both for the sale of Notes by the
Bank to the Agents as principal for resale to investors and other purchasers
and for the sale of Notes by the Bank through the Agents as agents and not as
principal in which case the Agents will act as agents of the Bank in soliciting
Note purchases. The Notes will be issued pursuant to an issuing and paying
agency agreement (the "Issuing and Paying Agency Agreement"), dated as of April
30, 1996, between the Bank and Chemical Bank as issuing and paying agent (the
"Issuing and Paying Agent"). As used herein, the term "Offering Circular"
refers to the most recent offering circular, as such document may be amended or
supplemented, which has been prepared by the Bank for use by the Agents in
connection with the offering of the Notes.
The Notes will be issued in book-entry form (each beneficial interest
in a global Note, a "Book-Entry Note" and collectively,
<PAGE> 42
the "Book-Entry Notes") and represented by one or more fully registered global
Notes (each, a "Global Note" and collectively, the "Global Notes") delivered to
the Issuing and Paying Agent, as agent for The Depository Trust Company, as
depositary ("DTC," which term includes any successor thereof), and recorded in
the book-entry system maintained by DTC. Book-Entry Notes represented by a
Global Note are exchangeable for definitive Notes in registered form, of like
tenor and of an equal aggregate principal amount, by the owners of such
Book-Entry Notes only upon certain limited circumstances described in the
Offering Circular and the applicable Global Note.
In connection with the qualification of Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Issuing and Paying
Agent will perform the custodial, document control and administrative functions
described below, in accordance with its respective obligations under the
Letters of Representations from the Bank and the Issuing and Paying Agent to
DTC, dated April 30, 1996, and a Certificate Agreement, dated December 2, 1988,
between the Issuing and Paying Agent and DTC (the "Certificate Agreement"), and
its obligations as a participant in DTC, including DTC's Same-Day Funds
Settlement System ("SFDS").
Capitalized terms used herein that are not otherwise defined shall
have the meanings ascribed thereto in the Notes.
Date of Issuance/
Authentication: Each Note will be dated as of the
date of its authentication by the
Issuing and Paying Agent. Each Note
shall also bear an original issue
date (the "Original Issue Date")
which shall be the settlement date
for such Note. The Original Issue
Date shall remain the same for all
Notes subsequently issued upon
transfer, exchange or substitution
of an original Note regardless of
their dates of authentication.
Maturities: Each Short-Term Senior Note will
mature on a date (the "Maturity
Date") selected by the purchaser and
agreed to by the Bank which is not
less than 30 days and not more than
one year from its Original Issue
Date, as selected by the initial
purchaser and agreed to by the
Issuing Bank; each Medium-Term
Senior Note will have a Maturity
Date selected by the purchaser and
agreed to by the Bank which is from
more than one year to not more than
30 years from its Original
2
<PAGE> 43
Issue Date; and each Subordinated
Note will have a Maturity Date
selected by the purchaser
and agreed to by the Issuing
Bank which is from five years
to 30 years from its Original
Issue Date; provided, however, that
Floating Rate Notes will mature on
an Interest Payment Date.
Registration: Notes will be issued only in fully
registered form.
Calculation of
Interest: Unless otherwise specified therein
and in the applicable Pricing
Supplement, interest (including
payments for partial periods) on
Fixed Rate Notes will be computed
and paid on the basis of a 360-day
year of twelve 30-day months. Unless
otherwise specified therein and in
the applicable Pricing Supplement,
interest on Fixed Rate Notes having
maturities of one year or less will
be computed on the basis of the
actual number of days of the year
divided by 360 and will be payable
only at maturity. Unless otherwise
specified therein and in the
applicable Pricing Supplement,
interest on Floating Rate Notes will
be calculated and paid on the basis
of the actual number of days in the
year divided by 360 in the case of
Commercial Paper Rate Notes, LIBOR
Notes, Federal Funds Rate Notes,
Prime Rate Notes and 11th District
Cost of Funds Rate Notes, and by the
actual number of days in the year
divided by 365 or 366, as the case
may be, in the case of Treasury Rate
Notes.
Redemption/Repayment: The Notes will be subject to
redemption by the Bank on and after
their respective Initial Redemption
Dates, if any. Initial Redemption
Dates, if any, will be fixed at the
time of sale and set forth in the
applicable Pricing Supplement and in
the applicable Note. If no Initial
Redemption Dates are indicated with
respect to a Note, such Note will
not be redeemable prior to its
Maturity Date.
3
<PAGE> 44
The Notes will be subject to
repayment at the option of the
holders thereof in accordance with
the terms of the Notes on their
respective Holder's Optional
Repayment Dates, if any. Holder's
Optional Repayment Dates, if any,
will be fixed at the time of sale
and set forth in the applicable
Pricing Supplement and in the
applicable Note. If no Holder's
Optional Repayment Dates are
indicated with respect to a Note,
such Note will not be repayable at
the option of the holder prior to
its Maturity Date.
Acceptance and
Rejection of Offers: When the Agent is soliciting offers
to purchase the Notes, the Bank
shall have the sole right to accept
offers to purchase Notes and may
reject any such offer, in whole or
in part. Each Agent shall promptly
communicate to the Bank, orally,
each offer to purchase Notes
solicited by such Agent on an agency
basis, other than those offers
rejected by the Agent. Each Agent
shall have the right, without notice
to the Bank, to reject any proposed
purchase of Notes through it, in
whole or in part.
Preparation of
Pricing Supplement: If any offer to purchase a Note is
accepted by the Bank, the Bank, with
the approval of the Agent which
presented such offer (the
"Presenting Agent"), will prepare a
Pricing Supplement reflecting the
terms of such Note.
Procedure for Changing
Rates or Other
Variable Terms: When the Agents are soliciting
offers to purchase the Notes from
the Bank and a decision has been
reached to change the interest rate
or any other variable term on any
Notes being sold by the Bank, the
Bank will promptly advise the Agents
and the Agents will forthwith
suspend solicitation of offers to
purchase such Notes. The Agents will
telephone the Bank with
recommendations as to the changed
interest rates or other variable
terms. At such time as the Bank
advises
4
<PAGE> 45
the Agents of the new interest rates
or other variable terms, the Agents
may resume solicitation of offers to
purchase such Notes. Until such
time, only "indications of interest"
may be recorded. Immediately after
acceptance by the Bank of an offer
to purchase at a new interest rate
or new variable term, the Bank and
the Presenting Agent shall follow
the procedures set forth under the
applicable "Settlement Procedures."
Suspension of Solici-
tation; Amendment
or Supplement: While the Agents are soliciting
offers to purchase Notes from the
Bank, the Bank may instruct the
Agents to suspend solicitation of
offers to purchase Notes at any
time. Upon receipt of such
instructions, the Agents will
forthwith suspend solicitation of
offers to purchase from the Bank
until such time as the Bank has
advised them that solicitation of
offers to purchase may be resumed.
If the Bank decides to amend the
Offering Circular (including
incorporating any documents by
reference therein) or supplement any
of such documents (other than to
change rates or other variable
terms), it will immediately notify,
with confirmation in writing to
follow, the Agents and will furnish
the Agents and their counsel with
copies of the proposed amendment
(including any document proposed to
be incorporated by reference
therein) or supplement; provided,
however,that the Bank shall be
required to provide such notice and
copies only to the extent that it is
required to do so pursuant to the
terms of the Distribution Agreement.
One copy of such proposed amendment
or supplement will be delivered or
mailed to the Agents at the
following respective addresses:
Merrill Lynch & Co., World Financial
Center, North Tower, 10th Floor, New
York, New York 10281-1310, (212)
449-0393, telecopier: (212)
449-2234, Attention: Product
Management - Notes; CS First Boston
Corporation, 55 East 52nd Street,
New York, New York 10055, (212)
909-2107,
5
<PAGE> 46
telecopier: (212) 318-0532,
Attention: Joseph D. Fashano;
Goldman, Sachs & Co., 85 Broad
Street, New York, New York 10004,
(212) 902-1482, telecopier: (212)
902-0658, Attention: Medium-Term
Note Desk; J.P. Morgan Securities
Inc., 60 Wall Street, New York, New
York 10260, (212) 648-0591,
telecopier (212) 649-5909,
Attention: Medium-Term Note Desk;
Lehman Brothers Inc., 3 World
Financial Center, 12th Floor, New
York, New York 10285, (212)
526-2040, telecopier: (212)
528-1718, Attention: Medium-Term
Note Department; Salomon Brothers
Inc, 7 World Trade Center, 31st
Floor, New York, New York 10048,
(212) 783-5889, telecopier: (212)
783-2274, Attention: Medium-Term
Note Group; Smith Barney Inc., 1345
Avenue of the Americas, New York,
New York 10105, (212) 698-3889,
telecopier: (212) 698-5873,
Attention: Frank Hamilton.
In the event that at the time the
solicitation of offers to purchase
from the Bank is suspended (other
than to change interest rates,
maturities, prices or other similar
variable terms with respect to the
Notes) there shall be any offers to
purchase Notes that have been
accepted by the Bank which have not
been settled, the Bank will promptly
advise the Agents whether such
offers may be settled and whether
copies of the Offering Circular, as
theretofore amended and/or
supplemented, as in effect at the
time of such suspension may be
delivered in connection with the
settlement of such orders. The Bank
will have the sole responsibility
for such decision and for any
arrangements which may be made in
the event that the Bank determines
that such orders may not be settled
or that copies of such Offering
Circular may not be so delivered.
Delivery of
Offering Circular: A copy of the most recent Offering
Circular and Pricing Supplement must
accompany or precede the earlier of
(a) the written confirmation of a
sale sent
6
<PAGE> 47
to a customer or his agent and (b)
the delivery of Notes to a customer
or his agent.
Authenticity of
Signatures: The Agents will have no obligations
or liability to the Bank or the
Issuing and Paying Agent in respect
of the authenticity of the signature
of any officer, employee or agent of
the Bank or the Issuing and Paying
Agent on any Note.
Documents Incorporated by Reference: The Bank shall supply the Agents
with an adequate supply of all
documents incorporated by reference
in the Offering Circular.
Business Day: "Business Day" means, with respect
to any Note, any day that is not a
Saturday or Sunday and that is not a
day on which banking institutions in
The City of New York or in the city
in which the Bank is headquartered
are authorized or required by law,
regulation or executive order to
close, and with respect to LIBOR
Notes only, any day that is a London
Business Day. "London Business Day"
means any day on which dealings in
deposits in U.S. dollars are
transacted in the London interbank
market.
Issuance: All Fixed Rate Notes issued in
book-entry form having the same
Original Issue Date, Interest Rate,
Interest Payment Dates, Regular
Record Dates, Default Rate, Maturity
Date, redemption and/or repayment
terms, if any, original issue
discount terms, if any, and
otherwise having identical terms and
provisions (collectively, the "Fixed
Rate Terms") will be represented
initially by a single Global Note in
fully registered form; and all
Floating Rate Notes issued in
book-entry form having the same
Original Issue Date, interest rate
basis upon which interest may be
determined (each, an "Interest Rate
Basis"), which may be the Commercial
Paper Rate, LIBOR, the Treasury
Rate, the Federal Funds Rate,
7
<PAGE> 48
the Prime Rate, the 11th
District Cost of Funds Rate and any
other rate set forth by the Bank in
a Floating Rate Note, Initial
Interest Rate, Index Maturity,
Spread and/or Spread Multi plier, if
any, Regular Record Dates, Maximum
Interest Rate, if any, Minimum
Interest Rate, if any, Interest
Payment Dates, Interest Payment
Period, Interest Reset Dates,
Interest Reset Period, Alternate
Rate Event Spread, LIBOR Screen, if
any, Calculation Agent, Default
Rate, Maturity Date, redemption or
repayment terms, if any, original
issue discount terms, if any, and
otherwise having identical terms and
provisions, (collectively, the
"Floating Rate Terms") will be
represented initially by a single
Global Note.
Identification: The Bank has arranged with the
CUSIP Service Bureau of the Standard
& Poor's Ratings Group (the "CUSIP
Service Bureau") for the reservation
of one series of CUSIP numbers
assignable to the Notes, which
series consists of approximately 900
CUSIP numbers that have been
reserved for and relating to Global
Notes, and the Issuing and Paying
Agent has delivered to DTC such list
of such CUSIP numbers. The Issuing
and Paying Agent will assign CUSIP
numbers to Global Notes as described
below under Settlement Procedure B.
DTC will notify the CUSIP Service
Bureau periodically of the CUSIP
numbers that the Issuing and Paying
Agent has assigned to the Global
Notes. The Issuing and Paying Agent
will notify the Bank at any time
when fewer than 100 of the reserved
CUSIP numbers of any series remain
unassigned to Global Notes and, if
it deems it necessary, the Bank will
reserve additional CUSIP numbers of
such series for assignment to Global
Notes. Upon obtaining such
additional CUSIP numbers, the Bank
will deliver a list of such
additional numbers to the Issuing
and Paying Agent and DTC. Book-Entry
Notes having an aggregate principal
amount in excess of $200,000,000 and
otherwise required to be represented
by the same
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<PAGE> 49
Global Note will instead be
represented by two or more Global
Notes which shall all be assigned
the same CUSIP number.
Registration: Unless otherwise specified by DTC,
each Global Note will be registered
in the name of Cede & Co., as
nominee for DTC, on the register
maintained by the Issuing and Paying
Agent. The owner of a Book-Entry
Note (i.e., an owner of a beneficial
interest in a Global Note) (or one
or more indirect participants in DTC
designated by such owner) will
designate one or more participants
in DTC (with respect to such
Book-Entry Note, the "Participants")
to act as agent for such beneficial
owner in connection with the
book-entry system maintained by DTC,
and DTC will record in book-entry
form, in accordance with
instructions provided by such
Participants, a credit balance with
respect to such Book-Entry Notes in
the account of such Participants.
The ownership interest of such
beneficial owner in such Global Note
will be recorded through the records
of such Participants or through the
separate records of such
Participants and one or more
indirect participants in DTC.
Transfers: Transfers of a beneficial interest
in a Global Note will be
accomplished by book entries made by
DTC and, in turn, by Participants
(and in certain cases, one or more
indirect participants in DTC) acting
on behalf of beneficial transferors
and transferees of such Global Note.
Exchanges: The Issuing and Paying Agent may
deliver to DTC and the CUSIP Service
Bureau at any time a written notice
specifying (a) the CUSIP numbers of
two or more Global Notes outstanding
on such date that represent Notes
having the same Fixed Rate Terms or
Floating Rate Terms, as the case may
be (other than Original Issue
Dates), and for which interest has
been paid to the same date; (b) a
date, occurring at least 30 days
after such written notice is
delivered and at least
9
<PAGE> 50
30 days before the next Interest
Payment Date for the related
Book-Entry Notes, on which such
Global Notes shall be exchanged for
one or more replacement Global
Notes; and (c) a new CUSIP number,
obtained from the Issuing and Paying
Agent, to be assigned to such
replacement Global Note. Upon
receipt of such notice, DTC will
send to its Participants a written
reorganization notice to the effect
that such exchange will occur on
such date. Prior to the specified
exchange date, the Issuing and
Paying Agent will deliver to the
CUSIP Service Bureau written notice
setting forth such exchange date and
the new CUSIP number and stating
that, as of such exchange date, the
CUSIP numbers of the Global Notes to
be exchanged will no longer be
valid. On the specified exchange
date, the Issuing and Paying Agent
will exchange such Global Notes for
a single Global Note bearing the new
CUSIP number, and the CUSIP numbers
of the exchanged Global Notes will,
in accordance with CUSIP Service
Bureau procedures, be cancelled and
not immediately reassigned.
Notwithstanding the foregoing, if
the Global Notes to be exchanged
exceed $200,000,000 in aggregate
principal amount, one re placement
Global Note will be authenticated
and issued to represent each
$200,000,000 of principal amount of
the exchanged Global Notes and an
additional Global Note or Global
Notes will be authenticated and
issued in exchange for any remaining
principal amount of such exchanged
Global Notes representing such
Book-Entry Notes (see
"Denominations" below).
Denominations: All Book-Entry Notes will be
denominated in U.S. dollars.
Book-Entry Notes will be issued in
minimum denominations of $100,000
and integral multiples of $1,000 in
excess thereof. Global Notes
representing Book-Entry Notes will
be denominated in principal amounts
not in excess of $200,000,000. If
one or more Book-Entry Notes having
an aggregate principal amount in
excess of
10
<PAGE> 51
$200,000,000 would, but for the
preceding sentence, be represented
by a single Global Note, then one
Global Note will be issued to
represent each $200,000,000
principal amount of such Book-Entry
Note or Notes and an additional
Global Note or Global Notes will be
issued to represent any remaining
principal amount of such Book-Entry
Notes. In such case, each of the
Global Notes representing such
Book-Entry Notes shall be assigned
the same CUSIP number.
Interest: General. Interest on each
Book-Entry Note will accrue from the
Original Issue Date or the most
recent Interest Payment Date for
which interest has been paid. Each
payment of interest on a Book-Entry
Note shall include interest accrued
through the day preceding, as the
case may be, the Interest Payment
Date, Maturity Date or date of
earlier redemption or repayment.
Interest payable on the Maturity
Date or date of earlier redemption
or repayment of a Book-Entry Note
will be payable to the holder to
whom the principal of such
Book-Entry Note is payable. DTC will
arrange for each pending deposit
message described under Settlement
Procedure C below to be transmitted
to the Standard & Poor's Ratings
Group, which will use the
information in the message to
include certain terms of the related
Book-Entry Note in the appropriate
daily bond report published by the
Standard & Poor's Ratings Group.
Regular Record Dates. Unless
otherwise specified in the
applicable Pricing Supplement, the
Regular Record Date with respect to
any Interest Payment Date for a
Fixed Rate Book-Entry Note shall be
the May 1 or November 1 next
preceding the applicable Interest
Payment Date. Unless otherwise
specified in the applicable Note,
interest on a Fixed Rate Book-Entry
Note with a maturity of one year or
less will be payable only at
maturity to the person to whom
principal shall be payable. The
Regular Record
11
<PAGE> 52
Date with respect to any Interest
Payment Date for a Floating Rate
Book-Entry Note shall be the date 15
calendar days (whether or not a
Business Day) prior to such Interest
Payment Date.
Interest Payment Dates. Interest
payments will be made on each
Interest Payment Date commencing
with the first Interest Payment Date
following the Original Issue Date;
provided, however,that the first
payment of interest on any Note
originally issued between a Regular
Record Date and an Interest Payment
Date will be made on the second
Interest Payment Date following the
Original Issue Date. If any Interest
Payment Date of a Fixed Rate
Book-Entry Note falls on a day which
is not a Business Day, the related
payment of interest on such Fixed
Rate Book-Entry Note shall be made
on the next succeeding Business Day
with the same force and effect as if
made on the date such payment was
due, and no interest shall accrue on
the amount so payable for the period
from and after such Interest Payment
Date. If any Interest Payment Date
with respect to any Floating Rate
Book-Entry Note would otherwise be a
day that is not a Business Day, such
Interest Payment Date will be the
next succeeding Business Day, except
that in the case of a LIBOR
Book-Entry Note, if such Business
Day is in the next succeeding
calendar month, such Interest
Payment Date will be the immediately
preceding Business Day.
Fixed Rate Book-Entry Notes. Unless
otherwise specified in the
applicable Pricing Supplement,
interest payments on Fixed Rate
Book-Entry Notes will be payable
semi-annually on May 15 and November
15 of each year and on the Maturity
Date. Unless otherwise specified in
the applicable Note, interest on
Fixed Rate Book-Entry Notes having
maturities of one year or less will
be payable only at maturity.
Floating Rate Notes. Unless
otherwise specified in the
applicable Pricing
12
<PAGE> 53
Supplement, interest payments on
Floating Rate Book-Entry Notes will
be made as specified in the Floating
Rate Book-Entry Note.
Notice of Interest Payments and
Regular Record Dates. On the first
Business Day after any Regular
Record Date, the Issuing and Paying
Agent will deliver to DTC a written
list of Regular Record Dates and
Interest Payment Dates that will
occur during the six-month period
beginning on such first Business Day
with respect to Floating Rate
Book-Entry Notes. Promptly after
each Interest De termination Date
for Floating Rate Book-Entry Notes,
the Issuing and Paying Agent will
notify the Standard & Poor's Ratings
Group of the interest rates
determined on such Interest
Determination Date.
Payments of Principal
and Interest: Payments of Interest Only. Promptly
after each Regular Record Date, the
Issuing and Paying Agent will
deliver to the Bank and DTC a
written notice specifying by CUSIP
number the amount of interest to be
paid on each Book-Entry Note on the
following Interest Payment Date
(other than an Interest Payment Date
coinciding with the Maturity Date)
and the total of such amounts. DTC
will confirm the amount payable on
each Book-Entry Note on such
Interest Payment Date by reference
to the daily bond reports published
by the Standard & Poor's Ratings
Group. On such Interest Payment
Date, the Bank will pay to the
Issuing and Paying Agent, and the
Issuing and Paying Agent in turn
will pay to DTC, an amount
sufficient to pay the total amount
of interest then due and owing
(other than on the Maturity Date),
at the times and in the manner set
forth below under "Manner of
Payment."
Payments on the Maturity Date. On or
about the first Business Day of each
month, the Issuing and Paying Agent
will deliver to DTC a written list
of principal of, premium, if any,
and
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<PAGE> 54
interest on, each Book-Entry Note
maturing on any Maturity Date or
date of earlier redemption or
repayment in the following month.
The Issuing and Paying Agent and DTC
will confirm the amounts of such
principal of, premium, if any, and
interest on, a Book-Entry Note on or
about the fifth Business Day
preceding the Maturity Date or date
of earlier redemption or repayment
of such Book-Entry Note. On such
Maturity Date, the Bank will pay to
the Issuing and Paying Agent, and
the Issuing and Paying Agent in turn
will pay to DTC, the principal
amount of such Book-Entry Note,
together with interest and premium,
if any, due on such Maturity Date or
date of earlier redemption or
repayment, at the times and in the
manner set forth below under "Manner
of Payment." If any Maturity Date or
date of earlier redemption or
repayment of a Book-Entry Note falls
on a day which is not a Business
Day, the related payment of
principal of, premium, if any, or
interest on, such Book-Entry Note
shall be made on the next succeeding
Business Day with the same force and
effect as if made on the date such
payment were due, and no interest
shall accrue on the amount so
payable for the period from and
after such Maturity Date or date of
earlier redemption or repayment, as
the case may be. Promptly after
payment to DTC of the principal of,
premium, if any, and interest due
on, the Maturity Date or date of
earlier redemption or repayment of
all Book-Entry Notes represented by
a Global Note, the Issuing and
Paying Agent will cancel such Global
Note and deliver such Global Note to
the Bank with an appropriate debit
advice. On the first Business Day of
each month, the Issuing and Paying
Agent will deliver to the Bank a
written statement indicating the
total principal amount of
outstanding Global Notes as of the
close of business on the immediately
preceding Business Day.
Manner of Payment. The total amount
of any principal of, premium, if
any, and
14
<PAGE> 55
interest on, Book-Entry Notes due on
any Interest Payment Date or
Maturity Date shall be paid by the
Bank to the Issuing and Paying Agent
in immediately available funds
available for use by the Issuing and
Paying Agent no later than 1:00
p.m., New York City time, on such
date. The Bank will make such
payment on such Book-Entry Notes by
instructing the Issuing and Paying
Agent to withdraw funds from an
account maintained by the Bank at
the Issuing and Paying Agent. The
Bank will confirm such instructions
in writing to the Issuing and Paying
Agent. Upon receipt of such funds,
the Issuing and Paying Agent will
pay by separate wire transfer (using
Fedwire message entry instructions
in a form previously specified by
DTC) to an account at the Federal
Reserve Bank of New York previously
specified by DTC, in funds available
for immediate use by DTC, each
payment of principal of, premium, if
any, and interest on, a Book-Entry
Note on such date. Thereafter on
such date, DTC will pay, in
accordance with its SDFS operating
procedures then in effect, such
amounts in funds available for
immediate use to the respective
Participants in whose names
Book-Entry Notes are recorded in the
book-entry system maintained by DTC.
Neither the Bank nor the Issuing and
Paying Agent will have any
responsibility or liability for the
payment by DTC of the principal of,
premium, if any, or interest on, the
Book-Entry Notes to such
Participants.
Withholding Taxes. The amount of any
taxes required under applicable law
to be withheld from any interest
payment on a Book-Entry Note will be
determined and withheld by the
Participant, indirect participant in
DTC or other person responsible for
forwarding payments and materials
directly to the beneficial owner of
such Book-Entry Note.
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<PAGE> 56
Settlement
Procedures: Settlement Procedures with regard
to Book-Entry Notes purchased by
each Agent as principal or sold by
each Agent, as agent of the Bank,
will be as follows:
A. The Presenting Agent will advise
the Bank by telephone,
confirmed by facsimile, of the
following settlement
information:
1. Taxpayer identification
number of the purchaser.
2. Principal amount of such
Book-Entry Notes.
3. (a) Fixed Rate Book-Entry
Notes:
(i) Interest Rate;
(ii) Interest Payment Dates
for Fixed Rate
Book-Entry Notes; and
(iii) Regular Record Dates
for Fixed Rate Book-
Entry Notes with
maturities
of greater than one year
(if other than the May
1 or November 1 prior
to each Interest Payment
Date).
(b) Floating Rate Book-Entry
Notes:
(i) Initial Interest Rate;
(ii) Interest Rate Basis;
(iii) Index Maturity;
(iv) Spread and/or Spread
Multiplier, if any;
(v) Regular Record Dates
(if other than the 15th
day prior to each
Interest Payment Date);
(vi) Maximum Interest Rate,
if any;
(vii) Minimum Interest Rate,
if any;
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<PAGE> 57
(viii) Interest Payment Dates;
(ix) Interest Payment Period;
(x) Interest Reset Dates;
(xi) Calculation Agent;
(xii) Interest Reset Period;
(xiii) Alternate Rate Event
Spread;
(xiv) LIBOR Screen, if any;
4. Price to public, if any, of
such Book-Entry Notes (if such
Book-Entry Notes are not
being offered "at the
market").
5. Trade Date.
6. Settlement Date (Original Issue
Date).
7. Maturity Date.
8. Redemption provisions, if any,
including: Initial
Redemption Date, Initial
Redemption Percentage and
Annual Redemption Percentage
Reduction.
Repayment provisions, if any,
including: Holder's Optional
Repayment Date(s).
9. Net proceeds to the Bank.
10. Whether such Book-Entry Notes
are being sold to the
Presenting Agent acting as
agent for the Bank or as
principal or to an investor
or other purchaser through
the Presenting Agent.
11. The Presenting Agent's
commission or discount, as
applicable.
12. Whether such Book-Entry Notes
are being issued with
Original Issue Discount and
the terms thereof.
13. Default Rate.
17
<PAGE> 58
14. Such other information
specified with respect to
such Book-Entry Notes.
B. If any offer to purchase a Note
is accepted by the Bank, the
Bank, with the approval of the
Presenting Agent, will prepare
a Pricing Supplement
reflecting the information set
forth in Settlement Procedure
A above, and will transmit the
Pricing Supplement to the
Presenting Agent by electronic
or facsimile transmission.
C. The Bank will advise the Issuing
and Paying Agent by electronic
means, telephone (confirmed in
writing at any time on the
same date) or facsimile
transmission of the
information set forth in
Settlement Procedure "A"
above, and the name of the
Presenting Agent. The Issuing
and Paying Agent, on behalf of
the Bank, will assign a CUSIP
number of the appropriate
series to the Global Note
representing such Book-Entry
Notes and will notify the Bank
by facsimile transmission or
other electronic transmission
of such CUSIP number as soon
as practicable, and as soon
thereafter as practicable, the
Bank will notify the
Presenting Agent by telephone
of such CUSIP number. Each
such instruction given by the
Bank to the Issuing and Paying
Agent will constitute a
representation and warranty by
the Bank to the Issuing and
Paying Agent and the Agents
that (i) the issuance and
delivery of such Global Note
has been duly and validly
authorized by the Bank and
(ii) that such Global Note,
when completed, authenticated
and delivered pursuant to the
Issuing and Paying Agency
Agreement, will constitute the
valid and legally binding
obligation of the Bank.
D. The Issuing and Paying Agent will
communicate to DTC and the
18
<PAGE> 59
Presenting Agent through DTC's
Participant Terminal System, a
pending deposit message
specifying the following
settlement information:
1. The information set forth in
Settlement Procedure A.
2. The identification numbers of
the participant accounts
maintained by DTC on behalf
of the Issuing and Paying
Agent and the Presenting
Agent.
3. Identification as a Senior Note
or a Subordinated Note.
4. Identification as a Fixed Rate
Book-Entry Note or Floating
Rate Book-Entry Note.
5. The initial Interest Payment
Date for each Global Note
representing such Book-Entry
Notes, the number of days by
which such date succeeds the
related Regular Record Date
for DTC purposes and, if then
calculable, the amount of
interest payable on such
Interest Payment Date (which
amount shall have been
confirmed by the Issuing and
Paying Agent).
6. The CUSIP number of each
Global Note representing such
Book-Entry Notes.
7. Whether such Global Note
represents any other Notes
issued or to be issued in
book-entry form.
E. The Issuing and Paying Agent will
complete, authenticate and
deliver to DTC the Global Note
representing such Book-Entry
Notes in a form that has been
approved by the Bank, the
Issuing and Paying Agent and
the Agents.
19
<PAGE> 60
F. DTC will credit the Book-Entry
Notes represented by such
Global Note to the participant
account of the Issuing and
Paying Agent maintained by
DTC.
G. The Issuing and Paying Agent will
enter an SDFS deliver order
through DTC's Participant
Terminal System instructing
DTC (i) to debit such
Book-Entry Notes to the
Issuing and Paying Agent's
participant account and credit
such Book-Entry Notes to the
participant account of the
Presenting Agent maintained by
DTC and (ii) to debit the
settlement account of the
Presenting Agent and credit
the settlement account of the
Issuing and Paying Agent
maintained by DTC, in an
amount equal to the price of
such Book-Entry Notes less
such Agent's commission. Any
entry of such deliver order
shall be deemed to constitute
a representation and warranty
by the Issuing and Paying
Agent to DTC that (i) the
Global Note representing such
Book-Entry Notes has been
issued and authenticated and
(ii) the Issuing and Paying
Agent is holding such Global
Note pursuant to the
Certificate Agreement.
H. In the case of Book-Entry Notes
sold through an Agent acting
as agent, the Presenting Agent
will enter an SDFS deliver
order through DTC's
Participant Terminal System
instructing DTC (i) to debit
such Book-Entry Notes to the
Presenting Agent's participant
account and credit such
Book-Entry Notes to the
participant account of the
Participants maintained by DTC
and (ii) to debit the
settlement accounts of such
Participants and credit the
settlement account of the
Presenting Agent maintained by
DTC, in an amount equal to the
initial public offering price
of such Book-Entry Notes.
20
<PAGE> 61
I. Transfers of funds in accordance
with SDFS deliver orders
described in Settlement
Procedures G and H will be
settled in accordance with
SDFS operating procedures in
effect on the Settlement Date.
J. The Issuing and Paying Agent will
credit to an account of the
Bank maintained at the Issuing
and Paying Agent funds
available for immediate use in
the amount transferred to the
Issuing and Paying Agent in
accordance with Settlement
Procedure G.
K. In the case of Book-Entry Notes
sold through an Agent acting
as agent, the Presenting Agent
will confirm the purchase of
such Book-Entry Notes to the
purchaser either by
transmitting to the
Participant with respect to
such Book-Entry Notes a
confirmation order through
DTC's Participant Terminal
System or by mailing a written
confirmation to such
purchaser.
Settlement Procedures
Timetable: For offers to purchase Book-Entry
Notes accepted by the Bank,
Settlement Procedures A through K
set forth above shall be completed
as soon as possible. However, all
information on sales settling one
day or more after the Trade Date
will be transmitted to DTC no later
than 10:00 a.m. on the Settlement
Date.
If a sale is to be settled on the
same Business Day as the Trade Date,
Settlement Procedure A shall be
completed no later than 11:00 a.m.
on such Business Day, Settlement
Procedure C shall be completed no
later than 12:00 p.m. on such
Business Day and Settlement
Procedure D shall be completed no
later than 1:00 p.m. on such
Business Day.
If a sale is to be settled more than
one Business Day after the Trade
Date, Settlement Procedures A and B
must be completed no later than 4:00
p.m. on the
21
<PAGE> 62
Trade Date and Settlement Procedures
C and D may, if necessary, be
completed at any time on the first
Business Day after such Trade Date.
Settlement Procedure I is subject to
extension in accordance with any
extension of Fedwire closing
deadlines and in the other events
specified in the SDFS operating
procedures in effect on the
Settlement Date.
If settlement of a Book-Entry Note is
rescheduled or cancelled, the
Issuing and Paying Agent will
deliver to DTC, through DTC's
Participant Terminal System, a
cancellation message to such effect
by no later than 2:00 p.m., New York
City time, on the Business Day
immediately preceding the scheduled
Settlement Date.
Failure to Settle: If the Issuing and Paying Agent
fails to enter an SDFS deliver order
with respect to a Book-Entry Note
pursuant to Settlement Procedure G,
then the Issuing and Paying Agent
may deliver to DTC, through DTC's
Participant Terminal System, as soon
as practicable a withdrawal message
instructing DTC to debit such
Book-Entry Note to the participant
account of the Issuing and Paying
Agent maintained at DTC. DTC will
process the withdrawal message,
provided that such participant
account contains a principal amount
of the Global Note representing such
Book-Entry Note that is at least
equal to the principal amount to be
debited. If withdrawal messages are
processed with respect to all
Book-Entry Notes represented by a
Global Note, the Issuing and Paying
Agent will mark such Global Note
"cancelled," make appropriate
entries in its records and return
such Global Note to the Bank. The
CUSIP number assigned to such Global
Note shall, in accordance with CUSIP
Service Bureau procedures, be
cancelled and not immediately
reassigned. If withdrawal messages
are processed with respect to some
of the Book-Entry Notes represented
by a Global Note, the Issuing and
Paying Agent will exchange such
Global Note for two Global Notes,
one of which shall
22
<PAGE> 63
represent the Book-Entry Notes for
which such withdrawal messages are
processed and shall be cancelled
immediately after issuance, and the
other of which shall represent the
other Book-Entry Notes previously
represented by the surrendered
Global Note and shall bear the CUSIP
number of the surrendered Global
Note.
In the case of any Book-Entry Note
sold through an Agent, acting as
agent, if the purchase price for any
Book-Entry Note is not timely paid
to the Participants with respect to
such Book-Entry Note by the
beneficial purchaser thereof (or a
person, including an indirect
participant in DTC, acting on behalf
of such purchaser), such
Participants and, in turn, the
applicable Agent may enter SDFS
deliver orders through DTC's
Participant Terminal System
reversing the orders entered
pursuant to Settlement Procedures G
and H, respectively. Thereafter, the
Issuing and Paying Agent will
deliver the withdrawal message and
take the related actions described
in the preceding paragraph. If such
failure shall have occurred for any
reason other than default by the
applicable Agent to perform its
obligations hereunder or under the
Distribution Agreement, the Bank
will reimburse such Agent on an
equitable basis for its loss of the
use of funds during the period when
the funds were credited to the
account of the Bank.
Notwithstanding the foregoing,
upon any failure to settle with
respect to a Book-Entry Note, DTC
may take any actions in accordance
with its SDFS operating procedures
then in effect. In the event of a
failure to settle with respect to a
Book-Entry Note that was to have
been represented by a Global Note
also representing other Book-Entry
Notes, the Issuing and Paying Agent
will provide, in accordance with
Settlement Procedure E, for the
authentication and issuance of a
Global Note representing
23
<PAGE> 64
such remaining Book-Entry Notes and
will make appropriate entries in its
records.
24
<PAGE> 1
EXHIBIT 10.2
Capital One Bank
Deposit Notes Due From
30 Days to 30 Years from Date of Issue
DISTRIBUTION AGREEMENT
April 30, 1996
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CS FIRST BOSTON CORPORATION
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
LEHMAN BROTHERS
LEHMAN BROTHERS INC.
SALOMON BROTHERS INC
SMITH BARNEY INC.
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310
Ladies and Gentlemen:
Capital One Bank, a banking association chartered under the laws of
the Commonwealth of Virginia (the "Bank"), confirms its agreement with Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Donaldson,
Lufkin & Jenrette Securities Corporation, CS First Boston Corporation, Goldman,
Sachs & Co., J.P. Morgan Securities Inc., Lehman Brothers, Lehman Brothers Inc.
(including its affiliate Lehman Commercial Paper Inc.), Salomon Brothers Inc
and Smith Barney Inc. (each referred to as an "Agent" and collectively referred
to as the "Agents") with respect to the issue and sale by the Bank of its
deposit liabilities called Deposit Notes (the "Deposit Notes"). The Deposit
Notes are to be issued pursuant to an Issuing and Paying Agency Agreement,
dated as of April 30, 1996 (the "Issuing and
<PAGE> 2
Paying Agency Agreement"), between the Bank and Chemical Bank, as the Issuing
and Paying Agent ("Issuing and Paying Agent"). As of the date hereof, the Bank
has authorized the issuance of up to $2,000,000,000 aggregate principal amount
at any time outstanding of its Deposit Notes. It is understood, however, that
the Bank may from time to time authorize the issuance of an additional
outstanding amount of Deposit Notes and that the Deposit Notes may be
distributed through or sold to one or more of the Agents pursuant to the terms
of this Agreement, all as though the issuance of the Deposit Notes were
authorized as of the date hereof. The Bank is a subsidiary of Capital One
Financial Corporation (the "Parent").
This Agreement provides both for the sale of Deposit Notes by the Bank
to the Agents as principal for resale to investors and other purchasers and for
the sale of Deposit Notes by the Bank directly to investors through the Agents
(as may from time to time be agreed to by the Bank and the Agents), in which
case the Agents will act as agents of the Bank in soliciting Deposit Note
purchasers.
SECTION 1. Appointment as Agents.
(a) Appointment of Agents. Subject to the terms and conditions
stated herein and subject to the reservation by the Bank of the right to sell
Deposit Notes directly to investors on its own behalf in those jurisdictions
where it is authorized to do so, the Bank hereby agrees that Deposit Notes will
be sold exclusively to or through the Agents. The Agents are authorized to
engage the services of any other broker or dealer in connection with the offer
or sale of the Deposit Notes purchased by an Agent as principal for resale to
others but are not authorized to appoint sub-agents. In connection with sales
by the Agents of Deposit Notes purchased by an Agent as principal to other
brokers or dealers, an Agent may allow any portion of the discount it has
received in connection with such purchase from the Bank to such brokers or
dealers.
(b) Sale of Deposit Notes. The Bank shall not approve the
solicitation of purchases of Deposit Notes in excess of the amount which shall
be authorized to be outstanding by the Bank from time to time or in excess of
the aggregate principal amount of Deposit Notes specified in the Offering
Circular. The Agents will have no responsibility for maintaining records with
respect to the aggregate principal amount of Deposit Notes sold or outstanding,
or of otherwise monitoring the availability of Deposit Notes for sale.
(c) Purchases as Principal. The Agents shall not have any obligation
to purchase Deposit Notes from the Bank as principal, but the Agents may agree
from time to time to purchase Deposit Notes as principal. Any such purchase of
Deposit Notes by an
2
<PAGE> 3
Agent as principal shall be made in accordance with Section 3(a) hereof.
(d) Solicitations as Agent. If agreed upon by an Agent and the
Bank, the Agent acting solely as agent for the Bank and not as principal, will
solicit purchases of the Deposit Notes. The Agent will communicate to the
Bank, orally or in writing, each offer to purchase Deposit Notes solicited by
such Agent on an agency basis, other than those offers rejected by the Agent.
The Agent shall have the right, in its discretion reasonably exercised, to
reject any proposed purchase of Deposit Notes, as a whole or in part, and any
such rejection shall not be deemed a breach of any Agent's agreement contained
herein. The Bank may accept or reject any proposed purchase of the Deposit
Notes, in whole or in part. The Agent shall make reasonable efforts to assist
the Bank in obtaining performance by each purchaser whose offer to purchase
Deposit Notes has been solicited by the Agent and accepted by the Bank. The
Agent shall not have any liability to the Bank in the event any such agency
purchase is not consummated for any reason. If the Bank shall default on its
obligation to deliver Deposit Notes to a purchaser whose offer it has accepted,
the Bank shall (i) hold the Agent harmless against any loss, claim or damage
arising from or as a result of such default by the Bank and (ii)
notwithstanding such default, pay to the Agent any commission to which it would
be entitled in connection with such sale.
(e) Additional Agents. The Bank may, from time to time, engage
additional agents either as principal or as an agent for the sale of the
Deposit Notes. In the event that the Bank elects to engage such additional
agents, the Bank shall provide notice to the Agents then parties to this
Agreement. Any additional agents shall be required, as a condition to their
engagement, either to enter into this Agreement (amended to include such
additional agents as signatories) or into an agreement with the Bank
substantially similar to this Agreement.
(f) Reliance. The Bank and the Agents agree that the Deposit Notes
purchased by the Agents shall be purchased, and the Deposit Notes the placement
of which an Agent arranges shall be placed by such Agent, in reliance on the
representations, warranties, covenants and agreements of the Bank contained
herein and on the terms and conditions and in the manner provided herein.
SECTION 2. Representations and Warranties.
(a) The Bank represents and warrants to each Agent as of the date
hereof, as of the date of each acceptance by the Bank of an offer for the
purchase of Deposit Notes (whether to the Agent as principal or through the
Agent as agent), as of the date of each delivery of Deposit Notes (whether to
such Agent as
3
<PAGE> 4
principal or through such Agent as agent) (the date of each such delivery to an
Agent as principal being hereafter referred to as a "Settlement Date"), and as
of the times referred to in Section 8(b) hereof (each of the times referenced
above being referred to hereafter as a "Representation Date"), as follows:
(i) Offering Circular. The Bank has prepared an offering
circular, dated April 30, 1996 (as such document may hereafter be
amended or supplemented by the Bank, including the material
incorporated therein by reference, the "Offering Circular"), to be
used by the Agents in connection with the Agents' solicitation of
purchasers of or offering of the Deposit Notes. The Bank has been
authorized by the Parent to incorporate by reference in the Offering
Circular the Parent's annual reports on Form 10-K, quarterly reports
on Form 10-Q and current reports on Form 8-K filed by the Parent with
the Securities and Exchange Commission (the "Commission") pursuant to
the Securities Exchange Act of 1934, as amended (the "1934 Act"), and
the rules and regulations thereunder. The Offering Circular, as of
the date hereof, does not and, as of the applicable Representation
Date, will not contain an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they are
made, not misleading; provided, however, that the representations and
warranties in this subsection shall not apply to statements in or
omissions from the Offering Circular made in reliance upon and in
conformity with information furnished to the Bank in writing by the
Agents expressly for use therein.
The Bank has incorporated by reference in the Offering
Circular the publicly available portions of each of its Consolidated
Reports of Condition and Income (each, a "Call Report"), and any
amendments or supplements thereto, beginning with and including the
Call Report for the period ended December 31, 1994 to and including
the most recent Call Report filed or published prior to the offering
of Deposit Notes. The publicly available portions of any Call Reports
filed by the Bank subsequent to the date of the Offering Circular and
prior to the termination of the offering of the Deposit Notes will be
incorporated therein by reference.
The documents incorporated by reference into the Offering
Circular, at the time they were or hereafter are filed with the
applicable federal regulatory authorities, complied or when so filed
will comply in all material respects with the 1934 Act or the rules
and regulations otherwise applicable thereto, as the case may be and,
when read together with the other information in the Offering
Circular, did not and will not include an untrue statement of a
material fact or omit to state a material fact required
4
<PAGE> 5
to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were or are
made, not misleading.
(ii) Due Organization, Valid Existence and Good Standing.
The Bank is a banking corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Virginia, and
is licensed, registered or qualified to conduct the business in which
it is engaged in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
license, registration or qualification, except to the extent that the
failure to be so licensed, registered or qualified or to be in good
standing would not have a material adverse effect on the Bank and its
subsidiaries taken as a whole. The Bank is a subsidiary of the
Parent, a Delaware corporation which has securities registered under
the 1934 Act.
(iii) Due Authorization, Execution and Delivery of this Agreement,
the Issuing and Paying Agency Agreement, the Interest Calculation
Agreement and the Letters of Representations. This Agreement, the
Issuing and Paying Agency Agreement and the Interest Calculation
Agreement dated as of April 30, 1996 between the Bank and Chemical
Bank (the "Interest Calculation Agreement") and the Short-Term and
Medium-Term Letters of Representations dated April 30, 1996 (the
"Letters of Representations") have been duly authorized, executed and
delivered by the Bank and are valid and legally binding agreements of
the Bank, enforceable against the Bank in accordance with their
respective terms, subject to applicable bankruptcy, liquidation,
insolvency, fraudulent transfer, reorganization, moratorium,
conservatorship, receivership and similar laws of general
applicability relating to, or affecting, creditors' rights, to general
equity principles and, with respect to any indemnification or
contribution obligation, to public policies which might affect such
obligations.
(iv) Due Authorization, Execution and Delivery of the Deposit
Notes. The Deposit Notes have been duly authorized for issuance and
sale pursuant to this Agreement and, when issued and authenticated
against payment of the consideration therefor, the Deposit Notes will
be valid and legally binding obligations of the Bank, enforceable
against the Bank in accordance with their respective terms, subject to
applicable bankruptcy, liquidation, insolvency, fraudulent transfer,
reorganization, moratorium, conservatorship, receivership and similar
laws of general applicability relating to, or affecting, creditors'
rights to general equity principles and, with respect to any
indemnification or contribution obligation, to public policies which
might affect such obligations.
5
<PAGE> 6
(v) Exemption from Registration. The Deposit Notes are
exempt from registration under the Securities Act of 1933, as amended
(the "1933 Act"), and neither registration of the Deposit Notes under
the 1933 Act, nor qualification of an indenture under the Trust
Indenture Act of 1939, as amended, will be required in connection with
the offer, sale, issuance or delivery of the Deposit Notes pursuant to
this Agreement or any applicable Terms Agreement (as defined in
Section 3(a) hereof).
(vi) Exemption from Investment Company Act. The Bank is not
required to register under the provisions of the Investment Company
Act of 1940, as amended (the "Investment Company Act"), or to take any
other action with respect to or under the Investment Company Act.
(vii) No Other Approvals Required. No consent, approval or
authorization of or filing with any governmental body or agency is
required for the performance by the Bank of its obligations under this
Agreement, the Deposit Notes, the Issuing and Paying Agency Agreement
and any applicable Terms Agreement, except such as may be required by
the securities or Blue Sky laws of the various states in connection
with the offer and sale of the Deposit Notes.
(viii) Description of Deposit Notes. The Deposit Notes are
substantially in the form heretofore delivered to the Agents and
conform in all material respects to the description thereof contained
in the Offering Circular under the caption "Description of Notes."
(ix) No Violation. Neither the Bank or any of its
subsidiaries nor the Parent or any of its subsidiaries is in violation
of its charter or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage loan agreement, note, lease or other
instrument to which it is a party or by which it or any of them or
their properties may be bound which might result in a material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Bank and its
subsidiaries, considered as one enterprise, or might materially and
adversely affect the properties or assets thereof or might materially
and adversely affect the consummation of this Agreement, the Issuing
and Paying Agency Agreement, the Interest Calculation Agreement, the
Letters of
6
<PAGE> 7
Representations or the Notes or any transaction contemplated hereby or
thereby. The execution, issuance and delivery by the Bank of the
Deposit Notes, and the execution, delivery and performance by the Bank
of this Agreement, the Issuing and Paying Agency Agreement, the
Interest Calculation Agreement, the Letters of Representations and any
applicable Terms Agreement, will not violate any law, rule,
regulation, order, judgment or decree applicable to the Parent and its
subsidiaries or to the Bank and any of its subsidiaries or violate any
provision of the Bank's charter or by-laws, or conflict with or result
in a material breach of or constitute a material default under, or
result in the creation or imposition of any material lien, charge or
encumbrance upon any property or assets of the Parent and its
subsidiaries or the Bank and any of its subsidiaries pursuant to any
contract, indenture, mortgage loan agreement, note, lease or other
instrument to which the Parent or any of its subsidiaries or the Bank
or any of its subsidiaries, or the property of any of them, is bound
or subject.
(x) No Material Adverse Change. Since the respective dates as of
which information is given or incorporated by reference in the
Offering Circular (a) there has not been any material adverse change
in the condition, financial or otherwise, or business affairs or
business prospects of the Bank and its subsidiaries or the Parent and
its subsidiaries, as the case may be, considered as one enterprise,
whether or not arising in the ordinary course of business, other than
as set forth or contemplated in the Offering Circular (including the
material incorporated by reference therein), and (b) there have been
no material transactions entered into by the Bank or any of its
subsidiaries or the Parent and any of its subsidiaries other than
those in the ordinary course of business.
(xi) Rating. The Deposit Notes of the Bank have been rated by a
"nationally recognized statistical rating agency" (as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the
1933 Act), in one of its four highest categories.
(xii) Financial Statements and Financial Information. The
financial statements and other financial information of the Parent and
its consolidated subsidiaries and the Bank and its consolidated
subsidiaries included or incorporated by reference in the Offering
Circular present fairly the consolidated financial position of the
Parent and its consolidated subsidiaries and the Bank and its
consolidated subsidiaries, the case may be, as of the date indicated
therein and the consolidated results of their operations for the
periods specified therein; and except as stated therein, such
financial statements have been prepared in conformity with generally
accepted accounting principles in the United States applied on a
consistent basis; financial information of certain financial
institutions, if any, proposed to be acquired by the Parent and the
Bank included or incorporated by reference in the Offering Circular
present fairly the
7
<PAGE> 8
financial position of such financial institutions as of the dates
indicated therein and the results of their operations for the periods
specified therein.
(xiii) Legal Proceedings. Except as may be set forth in the
Offering Circular, there is no action, suit or proceeding before or by
any court or governmental agency or body, domestic or foreign, now
pending, or, to the knowledge of the Bank, threatened against or
affecting, the Parent or any of its subsidiaries or the Bank or any of
its subsidiaries, which might, in the opinion of the Bank, result in
any material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the Bank
and its subsidiaries considered as one enterprise, or might materially
and adversely affect the properties or assets thereof or might
materially and adversely affect the consummation of this Agreement,
the Issuing and Paying Agency Agreement, the Interest Calculation
Agreement or the Notes or any transaction contemplated hereby or
thereby.
(xiv) Commodity Exchange Act. The Deposit Notes, when issued,
authenticated and delivered pursuant to the provisions of this
Agreement and the Issuing and Paying Agency Agreement, will be
excluded or exempted under the provisions of the Commodity Exchange
Act.
(xv) Insured Bank. The Bank is an insured bank under the
provisions of the Federal Deposit Insurance Act, as amended (the "FDI
Act").
(xvi) Status of Deposit Notes. The Deposit Notes are deposit
liabilities of the Bank, insured up to applicable limits by the
Federal Deposit Insurance Act (the "FDI Act"), and are entitled to the
priority provided to "deposit liabilities" by Section 11(d)(11) of the
FDI Act.
(xvii) Brokered Deposits. The Bank is a "well capitalized
insured depository institution" within the meaning of 12 C.F.R. 337.6
(the "Brokered Deposit Regulation").
(xviii) Regulation DD. The deposits evidenced by the Deposit
Notes are not "accounts" within the meaning of Regulation DD of the
Board of Governors of the Federal Reserve System (12 C.F.R. Part 230).
(xix) Pass Through Deposit Insurance. The Bank is not
limited by the Brokered Deposit Regulation or any other provision of
applicable law in its ability to solicit and accept, and renew or
rollover, brokered deposits. Consequently, deposit insurance on a
"pass through" basis
8
<PAGE> 9
will be available pursuant to 12 C.F.R. 330.12 for certain employee
benefit plans purchasing the Deposit Notes, subject to the limitations
and restrictions (including any applicable aggregation rules and
recordkeeping requirements) as set forth under 12 C.F.R. Part 330.
(b) Additional Certifications. Any certificate signed by any
officer of the Bank and delivered to the Agents or to counsel for the Agents in
connection with an offering of Deposit Notes, or the sale of Deposit Notes to
an Agent as principal, contemplated by this Agreement shall be deemed a
representation and warranty by the Bank to the Agents as to the matters covered
thereby on the date of such certificate and at each Representation Date
referred to in Section 2(a) hereof subsequent thereto.
SECTION 3. Purchases as Principal; Solicitations as Agents.
(a) Purchases as Principal. Unless otherwise agreed by an Agent and
the Bank, Deposit Notes shall be purchased by the Agent as principal. Such
purchases shall be made in accordance with terms agreed upon by the Agent and
the Bank with respect to such information (as applicable) as is specified in
Exhibit A hereto (a "Terms Agreement") (which terms shall be agreed upon
orally, and which may or may not be confirmed in writing in the form of Exhibit
A, prepared by the Agent and mailed or sent via facsimile transmission to the
Bank). The Agent's commitment to purchase Deposit Notes as principal shall be
deemed to have been made on the basis of the representations and warranties of
the Bank herein contained and shall be subject to the terms and conditions
herein set forth. Each purchase of Deposit Notes, unless otherwise agreed,
shall be at a discount from the principal amount of each such Deposit Note
equivalent to the applicable commission set forth in Exhibit B hereto. The
Agent may engage the services of any other broker or dealer in connection with
the resale of the Deposit Notes purchased as principal and may allow any
portion of the discount received in connection with such purchases from the
Bank to such brokers and dealers. At the time of each purchase of Deposit
Notes by an Agent as principal, the Agent shall specify the requirements for
the opinions of counsel and officers' certificates pursuant to Sections 6(a)
and 6(b) hereof.
(b) Solicitations as Agents. On the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, when agreed upon by the Bank and an Agent, such Agent, as an agent of
the Bank, will use its reasonable efforts to solicit offers to purchase the
Deposit Notes upon the terms and conditions set forth herein and in the
Offering Circular. All Deposit Notes sold through an Agent as agent will be
sold at 100% of their principal amount unless otherwise agreed to by the Bank
and the Agent.
9
<PAGE> 10
The Bank reserves the right, in its sole discretion, to suspend
solicitation of purchases of the Deposit Notes through the Agents, as agents,
commencing at any time for any period of time or permanently. Upon receipt of
instructions from the Bank, the Agents will forthwith suspend solicitation of
purchases from the Bank until such time as the Bank has advised the Agents that
such solicitation may be resumed.
The Bank agrees to pay each Agent a commission, in the form of a
discount, equal to the applicable percentage of the principal amount of each
Deposit Note sold by the Bank as a result of a solicitation made by such Agent
as set forth in Exhibit B hereto, or as otherwise agreed to by the Bank and
such Agent. The Agents may reallow any portion of the commission payable
pursuant hereto to dealers in connection with the offer and sale of the Deposit
Notes.
(c) Administrative Procedures. The purchase price, interest rate or
formula, maturity date and other terms of the Deposit Notes (as applicable)
specified in Exhibit A hereto shall be agreed upon by the Bank and the
applicable Agent and set forth in a pricing supplement to the Offering Circular
to be prepared in connection with each sale of Deposit Notes. Administrative
procedures with respect to the sale of Deposit Notes shall be agreed upon from
time to time by the Agents and the Bank (the "Procedures"). The initial
Administrative Procedures, as agreed upon by the Agents and the Bank, are
attached hereto as Exhibit G. The Agents and the Bank agree to perform the
respective duties and obligations specifically provided to be performed by the
Agents and the Bank herein and in the Procedures.
(d) Delivery. The documents required to be delivered by Section 6
hereof shall be delivered at the office of Brown & Wood, on the date hereof, or
at such other time as the Agents and the Bank may agree upon in writing (the
"Closing Time").
SECTION 4. Covenants of the Bank.
The Bank covenants with the Agents as follows:
(a) Amending Offering Circular. The Bank will give the Agents notice
of its intention to prepare any additional offering circular supplement with
respect to the sale of the Deposit Notes or any amendment or supplement to the
Offering Circular and will furnish the Agents with copies of any such amendment
or supplement or other documents proposed to be distributed a reasonable time
in advance of such proposed distribution and will not distribute any such
amendment or supplement or other documents in a form to which the Agents or
counsel for the Agents shall reasonably object.
10
<PAGE> 11
(b) Copies of Offering Circular. The Bank will deliver to the Agents
as many copies of the Offering Circular (as amended or supplemented, including
documents incorporated by reference therein) as the Agents shall reasonably
request in connection with sales or solicitations of offers to purchase the
Deposit Notes.
(c) Revisions of Offering Circular -- Material Changes. Except as
otherwise provided in Subsection (d) of this Section 4, if any event shall
occur or condition exist as a result of which it is necessary, in the
reasonable opinion of counsel for the Agents or counsel for the Bank, to amend
or supplement the Offering Circular in order that the Offering Circular will
not include any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made therein not misleading in
the light of the circumstances existing at the time it is delivered to a
purchaser, immediate notice shall be given, and confirmed in writing, to the
Agents to cease the solicitation of offers to purchase the Deposit Notes in
their capacity as agents and to cease sales of the Deposit Notes the Agents may
then own as principal, and the Bank will promptly prepare such amendment or
supplement as may be necessary to correct such untrue statement or omission.
The Agents shall, at such time as the Bank shall have furnished to the Agents
an amended or supplemented Offering Circular in form satisfactory to the Agents
and their counsel, resume solicitation of offers to purchase Deposit Notes
using the Offering Circular so amended and supplemented. The Bank agrees to
update the Offering Circular no less than annually within 120 days after its
fiscal year-end.
(d) Suspension of Certain Obligations. The Bank shall not be
required to comply with the provisions of subsection (c) of this Section 4
during any period from the later of the time (i) the Agents shall have
suspended solicitation of purchases of the Deposit Notes in their capacity as
agents pursuant to a request from the Bank and (ii) no Agent shall then hold
any Deposit Notes purchased as principal pursuant hereto, until the time the
Bank shall determine that solicitation of purchases of the Deposit Notes should
be resumed or the Agent shall subsequently purchase Deposit Notes from the Bank
as principal.
(e) Regulatory Reports. The Bank shall provide the Agents with
copies of the publicly available portion of any reports required to be filed by
the Bank or the Parent with any United States or state supervisory or
regulatory authority as promptly as reasonably practicable after such reports
become publicly available.
(f) Preparation of Pricing Supplements. The Bank will prepare,
with respect to the Deposit Notes to be sold through or to the Agents pursuant
to this Agreement, a pricing supplement
11
<PAGE> 12
with respect to the Deposit Notes in a form previously approved by the Agents.
(g) Blue Sky Qualifications. The Bank will endeavor, in cooperation
with the Agents, to qualify the Deposit Notes for offering and sale under the
applicable securities laws of such states and other jurisdictions of the United
States as the Agents may designate, and will maintain such qualifications in
effect for as long as may be required for the distribution of the Deposit
Notes; provided, however, that the Bank shall not be obligated to file any
general consent to service of process or to qualify as a foreign corporation in
any jurisdiction in which it is not so qualified. The Bank will file such
statements and reports as may be required by the laws of each jurisdiction in
which the Deposit Notes have been qualified as above provided. The Bank will
promptly advise the Agents of the receipt by the Bank of any notification with
respect to the suspension of the qualification of the Deposit Notes for sale in
any such state or jurisdiction or the initiating or threatening of any
proceeding for such purpose.
(h) Stand-Off Agreement. In connection with a purchase by an
Agent of Deposit Notes as principal, between the date of the agreement to
purchase such Deposit Notes and the Settlement Date with respect to such
purchase, the Bank will not, without the prior consent of the Agent who is
party to such agreement, offer or sell in the United States, or enter into any
agreement to sell in the United States, any debt securities or deposit
obligations of the Bank (other than the Deposit Notes that are to be sold
pursuant to such agreement and deposit and other bank obligations issued and
sold directly by the Bank in the ordinary course of its business).
SECTION 5. Payment of Expenses.
Whether or not the transactions contemplated hereunder are consummated
or this Agreement or any agreement by an Agent to purchase Deposit Notes as
principal is terminated, the Bank will pay all expenses incident to the
performance of the Bank's obligations under this Agreement including: (a) the
preparation, printing and delivery of the Offering Circular and all amendments
and supplements thereto; (b) the preparation of this Agreement; (c) the
preparation, issuance and delivery of the Deposit Notes, including fees and
expenses related to the use of book-entry notes; (d) the fees and disbursements
of the Bank's counsel, of the Issuing and Paying Agent and of any calculation
agents or exchange rate agents; (e) the reasonable fees and disbursements of
counsel to the Agents incurred in connection with the establishment of the
program relating to the Deposit Notes and incurred from time to time in
connection with the transactions contemplated thereby; (f) any fees charged by
rating agencies for rating of the Deposit Notes; (g) any advertising and other
out-
12
<PAGE> 13
of-pocket expenses of the Agents incurred with the approval of the Bank; (h)
the qualification of the Deposit Notes under state securities laws in
accordance with the provisions of Section 4(g) hereof, including the filing
fees and the reasonable fees and disbursements of counsel for the Agents in
connection therewith and in connection with the preparation of any Blue Sky
Survey and any Legal Investment Survey; and (i) the cost of preparing and
providing any CUSIP or other identification numbers for the Deposit Notes.
SECTION 6. Conditions of Agents' Obligations.
The obligations of the Agents to solicit offers to purchase the
Deposit Notes as agents of the Bank, the obligations of any purchasers of
Deposit Notes sold through an Agent as agent, and any obligation of an Agent to
purchase Deposit Notes pursuant to any agreement by such Agent to purchase
Deposit Notes as principal (or otherwise), will be subject at all times to the
accuracy in all material respects of the representations and warranties on the
part of the Bank herein and to the accuracy in all material respects of the
statements of the Bank's and the Parent's officers made in any certificate
furnished pursuant to the provisions hereof, to the performance and observance
in all material respects by the Bank of all covenants and agreements herein
contained and to the following additional conditions precedent:
(a) Legal Opinions. On the date hereof, the Agents shall have
received the following legal opinions, dated as of the date hereof and in form
and substance satisfactory to the Agents:
(i) Opinions of Counsel to the Bank and the Parent. The
opinion of John G. Finneran, Jr., Counsel to the Bank and the Parent,
substantially in the form of Exhibit C hereto.
(ii) Opinion of Counsel to the Agents. The opinion of Brown &
Wood, counsel to the Agents, covering such matters as they may
request.
(b) Officers' Certificates. On the date hereof and, if requested
by an Agent pursuant to Section 8(b) hereof, on each Settlement Date, the
Agents shall have received a certificate of (i) the President, Senior Vice
President or Vice President, and the Chief Financial or Chief Accounting
Officer of the Bank satisfactory to the Agents, substantially in the form of
Exhibit D hereto and (ii) the President or Vice President, and the Chief
Financial Officer, Chief Accounting Officer or Treasurer of the Parent
satisfactory to the Agents, substantially in the form of Exhibit E hereto, each
dated the date hereof or the Settlement Date, as the case may be.
13
<PAGE> 14
(c) Representations Certificate. On the date hereof, the Agents
shall have received a certificate of the Parent, substantially in the form of
Exhibit F hereto.
(d) Other Documents. On the date hereof and on each Settlement
Date, counsel to the Agents shall have been furnished with such documents and
opinions as such counsel may reasonably request for the purpose of enabling
such counsel to pass upon the issuance and sale of the Deposit Notes as herein
contemplated and related proceedings, or in order to evidence the accuracy and
completeness of any of the representations and warranties, or the fulfillment
of any of the conditions, herein contained; and all proceedings taken by the
Bank in connection with the issuance and sale of Deposit Notes as herein
contemplated shall be satisfactory in form and substance to the Agents and to
counsel to the Agents.
If any condition specified in this Section 6 shall not have been
fulfilled when and as required to be fulfilled, this Agreement (or, at the
option of the Agent, any applicable agreement by such Agent to purchase Deposit
Notes as principal) may be terminated by the Agents by notice to the Bank at
any time at or prior to the Closing Time and any such termination shall be
without liability of any party to any other party, except that the provisions
of Section 5 hereof, the indemnity and contribution agreement set forth in
Sections 9 and 10 hereof, and the provisions of Sections 11, 14 and 15 hereof
shall remain in effect.
SECTION 7. Delivery of and Payment for Deposit Notes Sold
through an Agent.
Delivery of Deposit Notes sold through an Agent as agent shall be made
by the Bank to such Agent for the account of any purchaser only against payment
therefor in immediately available funds. In the event that a purchaser shall
fail either to accept delivery of or to make payment for a Deposit Note on the
date fixed for settlement, the Agent shall promptly notify the Bank and deliver
the Deposit Note to the Bank, and, if the Agent has theretofore paid the Bank
for the Deposit Note, the Bank will promptly return such funds to the Agent.
If such failure shall have occurred for any reason other than default by the
applicable Agent to perform its obligations hereunder, the Bank will reimburse
such Agent on an equitable basis for its loss of the use of funds during the
period when the funds were credited to the account of the Bank.
14
<PAGE> 15
SECTION 8. Additional Covenants of the Bank.
The Bank covenants and agrees with each Agent that:
(a) Reaffirmation of Representations and Warranties. Each
acceptance by the Bank of an offer for the purchase of Deposit Notes (whether
to an Agent as principal or through the Agent as agent), and each delivery of
Deposit Notes to the Agents, shall be deemed to be an affirmation that the
representations and warranties of the Bank contained in this Agreement and in
any certificate theretofore delivered to the Agents pursuant hereto are true
and correct in all material respects at the time of such acceptance or sale, as
the case may be, and an undertaking that such representations and warranties
will be true and correct in all material respects at the time of delivery to
the purchaser or his agent, or to the applicable Agent, of the Deposit Note or
Deposit Notes relating to such acceptance or sale, as the case may be, as
though made at and as of each such time (and it is understood that such
representations and warranties shall relate to the Offering Circular as amended
and supplemented to each such time, including any amendment resulting from the
incorporation by reference of documents filed by the Bank or the Parent).
(b) Subsequent Delivery of Certificates. Each time that (i) the
Offering Circular shall be amended or supplemented (other than by an amendment
or supplement providing solely for a change in the interest rates or other
variable terms of Deposit Notes), (ii) there is filed with the Commission or
any bank regulatory agency any document incorporated by reference into the
Offering Circular, (iii) (if required in connection with the purchase of
Deposit Notes by an Agent as principal) the Bank sells Deposit Notes to such
Agent as principal or (iv) the Bank issues and sells Deposit Notes in a form
not previously certified to the Agents by the Bank, the Bank shall furnish or
cause to be furnished forthwith to the Agents certificates from the Bank and
the Parent dated the date of such amendment or supplement, the date of such
filing, or the Settlement Date, as the case may be, to the effect that the
statements contained in the certificates which were last furnished to the
Agents by the Bank and the Parent pursuant to Section 6(b) hereof are true and
correct in all material respects at the time of such amendment, supplement or
sale, as the case may be, as though made at and as of such time (except that
such statements shall be deemed to relate to the Offering Circular as amended
and supplemented to such time, including any amendment resulting from
incorporation by reference of documents filed by the Bank and the Parent) or,
in lieu of such certificates, certificates of the same form as the certificates
referred to in said Section 6(b), modified as necessary to relate to the
Offering Circular as amended and supplemented to the time of delivery of such
certificates.
15
<PAGE> 16
(c) Subsequent Delivery of Legal Opinions. Each time that (i) the
Offering Circular shall be amended or supplemented with respect to the Deposit
Notes (other than by an amendment or supplement (x) providing solely for a
change in interest rates or other variable terms of the Deposit Notes or
similar changes, or (y) setting forth financial statements or other information
as of and for a fiscal period (unless, in the reasonable judgment of the
Agents, an opinion of counsel should be furnished in light of such an
amendment)), (ii) there is filed with the Commission any document incorporated
by reference into the Offering Circular, (iii) (if required in connection with
the purchase of Deposit Notes by an Agent as principal) the Bank sells Deposit
Notes to such agent as principal or (iv) the Bank issues and sells Deposit
Notes in a form not previously certified to the Agents by the Bank, the Bank
shall furnish or cause to be furnished forthwith to the Agents and the Agents'
counsel a letter from each counsel last furnishing an opinion referred to in
Section 6(a)(i) hereof (or such other counsel as may be acceptable to the
Agents) to the effect that the Agents may rely on such last opinion to the same
extent as though it were dated the date of such letter authorizing reliance
(except that statements in such last opinion shall be deemed to relate to the
Offering Circular as amended and supplemented to the time of delivery of such
letter authorizing reliance) or in lieu of such letter, each such counsel (or
such other counsel as may be acceptable to the Agents) may deliver a letter in
the same form as its letter referred to in Section 6(a)(i) but modified, as
necessary to relate to the Offering Circular as amended and supplemented to the
time of delivery of such letter.
SECTION 9. Indemnification.
(a) Indemnification of Agents. The Bank agrees to indemnify and
hold harmless each Agent and each person, if any, who controls each Agent
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
as follows:
(i) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Offering Circular (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any
16
<PAGE> 17
such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Bank;
(iii) against any and all expense whatsoever (including the
reasonable fees and disbursements of counsel chosen by the Agents),
as reasonably incurred in investigating, preparing or defending
against any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above; and
(iv) against any and all loss, liability, claim, damage
and expense whatsoever, as incurred, arising out of the breach by the
Bank of any agreement or representation made or deemed to be made
pursuant to this Agreement.
(b) Indemnification of Bank. Each Agent agrees, severally and not
jointly, to indemnify and hold harmless the Bank and each person, if any, who
controls the Bank within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act against any and all loss, liability, claim, damage and
expense described in the indemnity contained in subsection (a) of this Section,
as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Offering Circular (or any
amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Bank by such Agent expressly for use in
the Offering Circular (or any amendment or supplement thereto).
(c) General. Each indemnified party shall give prompt notice to
each indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability which it may
have otherwise than on account of this indemnity agreement. An indemnifying
party may participate at its own expense in the defense of such action. In no
event shall the indemnifying parties be liable for the fees and expenses of
more than one counsel (in addition to any local counsel) for all indemnified
parties in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances.
SECTION 10. Contribution.
In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 9 hereof
is for any reason held to be unavailable to or insufficient to hold harmless
the indemnified parties although applicable in accordance with its terms, the
Bank, on the one
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<PAGE> 18
hand, and the Agents, on the other hand, shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by
said indemnity agreement incurred by the Bank, on the one hand, and the Agents,
on the other hand, as incurred, in such proportions that each Agent is
responsible for that portion represented by the percentage that the total
commissions and underwriting discounts received by such Agent to the date of
such liability bears to the total sales price received by the Bank from the
sale of Deposit Notes to the date of such liability, and the Bank is
responsible for the balance; provided, however, that no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section, each person,
if any, who controls the Agents within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act shall have the same rights to contribution as
the Agents, and each person, if any, who controls the Bank within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same
rights to contribution as the Bank. The obligations of each of the Agents and
the Bank under this Section to contribute are several in proportion to the
respective purchases or sales made by or through it to which such loss, claim,
damage or liability (or action in respect thereof) relates and are not joint.
SECTION 11. Representations, Warranties and Agreements to
Survive Delivery.
All representations, warranties and agreements contained in this
Agreement or contained in certificates of officers of the Bank pursuant hereto,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Agents or any controlling person of
an Agent, or by or on behalf of the Bank, and shall survive each delivery of
and payment for any of the Deposit Notes.
SECTION 12. Termination.
(a) Termination of this Agreement. This Agreement (excluding any
agreement hereunder by an Agent to purchase Deposit Notes as principal) may be
terminated for any reason, at any time by either the Bank or any of the Agents
as to itself, immediately upon the giving of 30 days written notice of such
termination to the other party hereto in accordance with the provisions of
Section 13 hereof.
(b) Termination of an Agreement to Purchase Deposit Notes as
Principal. An Agent may terminate an agreement hereunder by such Agent to
purchase Deposit Notes as principal, immediately upon notice to the Bank, at
any time prior to the Settlement Date relating thereto (i) if there has been,
since the date of such
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<PAGE> 19
agreement or since the respective dates as of which information is given in the
Offering Circular, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Bank and its subsidiaries, or of the Parent and its subsidiaries, as the case
may be, considered as one enterprise, whether or not arising in the ordinary
course of business, or (ii) if there shall have occurred any material adverse
change in the financial markets in the United States or any outbreak or
escalation of hostilities or other national or international calamity or crisis
the effect of which is such as to make it, in the judgment of such Agent,
impracticable to market the Deposit Notes or enforce contracts for the sale of
the Deposit Notes, or (iii) if trading in any securities of the Bank or the
Parent shall have been suspended by the Commission or a national securities
exchange, or if trading generally on either the American Stock Exchange, the
New York Stock Exchange or the Chicago Board of Trade shall have been
suspended, or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required, by either of
said exchanges or by order of the Commission or any other governmental
authority, or if a banking moratorium shall have been declared by either
federal, New York State or the Commonwealth of Virginia authorities, as the
case may be, or (iv) if the rating assigned by any nationally recognized
securities rating agency to any debt securities of the Bank as of the date of
any agreement by an Agent to purchase the Deposit Notes as principal shall have
been lowered since that date or if any such rating agency shall have publicly
announced that it has placed under surveillance or review, other than with
positive implications, its rating of any debt securities or deposits of the
Bank, or (v) if there shall have come to such Agent's attention any facts that
would cause such Agent to believe that the Offering Circular or any amendments
thereto or supplements thereof, at the time it was required to be delivered to
a purchaser of Deposit Notes, contained an untrue statement of a material fact
or omitted to state a material fact necessary in order to make the statements
therein, in light of the circumstances existing at the time of such delivery,
not misleading.
(c) General.
In the event of any such termination, none of the parties will have
any liability to the other parties hereto, except that (i) the Agents shall be
entitled to any commissions earned in accordance with the third paragraph of
Section 3(b) hereof, (ii) if at the time of termination (a) an Agent shall own
any Deposit Notes purchased with the intention of reselling them or (b) an
offer to purchase any of the Deposit Notes has been accepted by the Bank but
the time of delivery to the purchaser or his agent of the Deposit Note or
Deposit Notes relating thereto has not occurred, the covenants set forth in
Sections 4 and 8 hereof shall remain in effect until such Deposit Notes are so
19
<PAGE> 20
resold or delivered, as the case may be, and (iii) the provisions of Section 5
hereof, the indemnity and contribution agreements set forth in Sections 9 and
10 hereof, and the provisions of Section 11, 14 and 15 hereof shall remain in
effect.
SECTION 13. Notices.
Unless otherwise provided herein, all notices required under the terms
and provisions hereof shall be in writing, either delivered by hand, by mail or
by telex, telecopier or telegram, and any such notice shall be effective when
received at the address specified below.
If to the Bank:
Capital One Bank
2980 Fairview Park Drive
Falls Church, Virginia 22042-4525
Attention: Treasurer
Facsimile Number: (703) 205-1093
If to the Parent:
Capital One Financial Corporation
2980 Fairview Park Drive
Falls Church, Virginia 22042-4525
Attention: Chief Financial Officer
Facsimile Number: (703) 205-1093
If to Merrill, Lynch & Co.:
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower, 10th Floor
World Financial Center
New York, New York 10281-1310
Attention: Product Management-Bank Notes
Facsimile Number: (212) 449-2234
If to CS First Boston Corporation:
CS First Boston Corporation
55 East 52nd Street
New York, New York 10055
Attention: Short & Medium-Term Finance Department
Facsimile Number: (212) 318-1498
20
<PAGE> 21
If to Donaldson, Lufkin & Jenrette Securities Corporation:
Donaldson, Lufkins & Jenrette
Securities Corporation
140 Broadway, 40th Floor
New York, New York 10005
Attention: Roger Thomson
Facsimile Number: (212) 504-8244
If to Goldman, Sachs & Co.:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Medium-Term Note Desk
Facsimile Number: (212) 902-0658
If to J.P. Morgan Securities Inc.:
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Attention: Medium-Term Note Desk
Facsimile Number: (212) 648-5909
If to Lehman Brothers Inc.:
Lehman Brothers
Lehman Brothers Inc.
3 World Financial Center, 12th Floor
New York, New York 10285-1200
Attention: Medium-Term Note Department
Facsimile Number: (212) 528-1718
If to Salomon Brothers Inc:
Salomon Brothers Inc
7 World Trade Center, 31st Floor
New York, New York 10048
Attention: Medium-Term Note Department
Facsimile Number: (212) 783-2274
If to Smith Barney Inc.:
Smith Barney Inc.
390 Greenwich Street
New York, New York 10013
Attention: Continously Offered Products Group
Facsimile Number: (212) 723-8854
21
<PAGE> 22
or at such other address as such party may designate from time to time by
notice duly given in accordance with the terms of this Section 13.
SECTION 14. Parties.
This Agreement shall inure to the benefit of and be binding upon the
Agents, the Bank and their respective successors. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the parties hereto and their respective
successors and the controlling persons and officers and directors referred to
in Sections 9 and 10 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein or therein contained. This Agreement and all conditions and
provisions hereof and thereof are intended to be for the sole and exclusive
benefit of the parties hereto and respective successors and said controlling
persons and officers and directors and their heirs and legal representatives,
and for the benefit of no other person, firm or corporation. No purchaser of
Deposit Notes shall be deemed to be a successor by reason merely of such
purchase.
SECTION 15. Governing Law.
This Agreement and all the rights and obligations of the parties shall
be governed by and construed in accordance with the laws of New York applicable
to agreements made and to be performed in such state. Any suit, action or
proceeding brought by the Bank or the Parent in connection with or arising
under this Agreement shall be brought solely in the state or federal court of
appropriate jurisdiction located in the Borough of Manhattan, The City of New
York.
22
<PAGE> 23
SECTION 16. Counterparts.
This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with the your understanding of our
agreement, please sign and return to the Bank a counterpart hereof, whereupon
this instrument along with all counterparts will become a binding agreement
between each of the Agents and the Bank in accordance with its terms.
Very truly yours,
CAPITAL ONE BANK
By: /s/ DAVID M. WILLEY
------------------------------
Name: David M. Willey
Title: Vice President,
Cashier, Treasurer
and Assistant Secretary
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: [SIG]
----------------------------------
Name:
Title:
CS FIRST BOSTON CORPORATION
By: /S/ MARTHA D. BAILEY
----------------------------------
Name: MARTHA D. BAILEY
Title: VICE PRESIDENT
23
<PAGE> 24
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: [SIG]
----------------------------------
Name:
Title:
GOLDMAN, SACHS & CO.
By: /s/ GOLDMAN, SACHS & CO.
----------------------------------
Name:
Title:
J.P. MORGAN SECURITIES INC.
By: /s/ GEOFFREY B. FITZGERALD
----------------------------------
Name:
Title:
LEHMAN BROTHERS INC.
By: /s/ BART MCDALE
----------------------------------
Name: Bart McDale
Title:
SALOMON BROTHERS INC
By: [SIG]
----------------------------------
Name:
Title:
SMITH BARNEY INC.
By: [SIG]
----------------------------------
Name:
Title:
24
<PAGE> 25
EXHIBIT A
The following terms, if applicable, shall be agreed to by the Agent
and the Bank in connection with each sale of Deposit Notes to the Agent as
principal:
Principal Amount: $_______
Interest Rate:
If Fixed Rate Note, Interest Rate:
If Floating Rate Note:
Interest Rate Basis:
Initial Interest Rate:
Spread or Spread Multiplier, if any:
Interest Rate Reset Month(s):
Interest Reset Date(s):
Interest Payment Date(s):
Index Maturity:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Interest Reset Period:
Interest Payment Period:
Calculation Agent:
If Redeemable:
Initial Redemption Date:
Additional Redemption Dates:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction:
If Repayable:
Optional Repayment Date(s):
Date of Maturity:
Purchase Price: ___________%
Settlement Date and Time:
Additional Terms:
Also, in connection with the purchase of Deposit Notes by the Agent as
principal, agreement as to whether the following will be required:
(a) Officers' Certificates pursuant to Section 8(b) of
the Distribution Agreement.
A-1
<PAGE> 26
(b) Legal Opinion pursuant to Section 8(c) of the
Distribution Agreement.
A-2
<PAGE> 27
EXHIBIT B
As compensation for the services of the Agents hereunder, the Bank
shall pay the applicable Agent, on a discount basis, a commission for the sale
of each Deposit Note equal to the principal amount of the Deposit Note
multiplied by the appropriate percentage set forth below:
<TABLE>
<CAPTION>
PERCENT OF
MATURITY RANGES PRINCIPAL AMOUNT
- --------------- ----------------
<S> <C>
From 30 days to less than 9 months............ .050%
From 9 months to less than 1 year............. .125
From 1 year to less than 18 months............ .150
From 18 months to less than 2 years........... .200
From 2 years to less than 3 years............. .250
From 3 years to less than 4 years............. .350
From 4 years to less than 5 years............. .450
From 5 years to less than 6 years............. .500
From 6 years to less than 7 years............. .550
From 7 years to less than 10 years............ .600
From 10 years to less than 15 years........... .625
From 15 years to less than 20 years........... .700
From 20 years to 30 years..................... .750
</TABLE>
B-1
<PAGE> 28
[FORM OF OPINION OF COUNSEL TO THE BANK AND THE PARENT]
EXHIBIT C
April 30, 1996
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
CS FIRST BOSTON CORPORATION
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
LEHMAN BROTHERS
LEHMAN BROTHERS INC.
SALOMON BROTHERS INC
SMITH BARNEY INC.
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower
New York, New York 10281
Ladies and Gentlemen:
I have acted as counsel for Capital One Bank (the "Bank") and
Capital One Financial Corporation (the "Parent"), in connection with the
execution today (i) by you and the Bank of the Distribution Agreement (the
"Distribution Agreement"), (ii) by Parent of the Representations Certificate
pursuant to Section 6(c) of the Distribution Agreement (the "Representations
Certificate"), and (iii) by the Bank and Chemical Bank (the "Issuing and Paying
Agent") of the Issuing and Paying Agency Agreement (the "IPA Agreement") and
the Interest Calculation Agreement (the "Interest Calculation Agreement"), and
(iv) by the Bank, the Issuing and Paying Agent and The Depository Trust Company
of the Short-Term and Medium-Term Letters of Representations (the "Letters of
Representations") all of which are dated April 30, 1996, relating to the
issuance and sale by the Bank of its Deposit Notes due from 30 days to 30 years
from the date of issue (the "Deposit Notes"). This opinion letter is furnished
pursuant to Section 6(a)(i) of the Distribution Agreement. Capitalized terms
used herein and not otherwise defined have the meanings set forth in the
Distribution Agreement.
In arriving at the opinions expressed below, I have examined
and relied on the following documents:
C-1
<PAGE> 29
(a) an executed copy of the Distribution Agreement, the
Representations Certificate, the IPA Agreement and
the Interest Calculation Agreement;
(b) the Offering Circular;
(c) specimens of the Deposit Notes; and
(d) the documents delivered to you by the Bank and the
Parent at the closing pursuant to the Distribution
Agreement.
In addition, I have examined and relied on the originals or copies certified or
otherwise identified to my satisfaction of all such corporate records of the
Bank and the Parent and such other instruments and other certificates of public
officials, officers and representatives of the Bank and the Parent and such
other persons, and I have made such investigations of law, as I have deemed
appropriate as a basis for the opinions expressed below. In rendering the
opinions expressed below, I have assumed and have not verified that the
signatures on all documents that I have examined are genuine, that all copies
of documents that I have examined conform to the originals thereof, and that
the Deposit Notes conform to the specimen thereof that I have examined.
Based on the foregoing, it is my opinion that:
1. The Bank is a banking corporation validly existing
and in good standing under the laws of the Commonwealth of Virginia.
The Parent is a corporation validly existing and in good standing
under the laws of the State of Delaware and is qualified to do
business as a foreign corporation in the Commonwealth of Virginia.
The Bank is a wholly-owned subsidiary of the Parent, which has
securities registered under the Securities Exchange Act of 1934, as
amended.
2. The Distribution Agreement, the IPA Agreement, the
Interest Calculation Agreement and the Letters of Representations have
been duly authorized, executed and delivered by the Bank and, assuming
due authorization, execution and delivery by all parties thereto other
than the Bank, are legal, valid, binding and enforceable agreements of
the Bank, subject to applicable bankruptcy, liquidation, insolvency,
fraudulent transfer, reorganization, moratorium, conservatorship,
receivership, and similar laws of general applicability relating to,
or affecting, creditors' rights and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law), and subject, as to any
indemnification or contribution obligation, to public policies which
might affect such obligations.
3. The Representations Certificate has been duly
authorized, executed and delivered by a duly authorized officer of the
Parent and, assuming due authorization,
C-2
<PAGE> 30
execution and delivery of the Distribution Agreement, the IPA
Agreement and the Interest Calculation Agreement by all parties
thereto other than the Bank, is a legal, valid, binding and
enforceable agreement of the Parent, subject to applicable bankruptcy,
liquidation, insolvency, fraudulent transfer, reorganization,
moratorium, conservatorship, receivership and similar laws of general
applicability relating to, or affecting, creditors' rights and
subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity
or at law), and subject, as to any indemnification or contribution
obligation, to public policies which might affect such obligations.
4. The Deposit Notes have been duly authorized for
issuance and sale pursuant to the Distribution Agreement and, when
issued and authenticated against payment of the consideration
therefor, the Deposit Notes will be legal, valid, binding and
enforceable obligations of the Bank, subject to applicable bankruptcy,
liquidation, insolvency, fraudulent transfer, reorganization,
moratorium, conservatorship, receivership, and similar laws of general
applicability relating to, or affecting creditors rights and subject,
as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
5. The execution, issuance and delivery by the Bank of
the Deposit Notes, the execution, delivery and performance by the Bank
of the Distribution Agreement, the IPA Agreement, the Interest
Calculation Agreement, the Letters of Representations and any
agreement by an agent party to the Distribution Agreement to purchase
the Deposit Notes as principal, and the execution, delivery and
performance by the Parent of the Representations Certificate, do no
violate any law, rule, regulation, order, judgment or decree
applicable to the Parent and its subsidiaries or the Bank and its
subsidiaries, if any, or violate any provision of each of the Bank's
or the Parent's Charter, Bylaws, or Articles of Incorporation or
Articles of Association, as the case may be, or, conflict with or
result in a material breach of or constitute a material default under,
or result in the creation or imposition of any material lien, charge
or encumbrance upon any property or assets of the Parent and its
subsidiaries or the Bank and its subsidiaries, if any, pursuant to any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument known to me to which the Parent or any of its subsidiaries
or the Bank and its subsidiaries if any, or the property of any of
them, is bound or subject.
6. The Deposit Notes are exempt from registration under
the Securities Act of 1933, as amended (the "1933
C-3
<PAGE> 31
Act"), and neither registration of the Deposit Notes under the 1933
Act, nor qualification of an indenture under the Trust Indenture Act
of 1939, as amended, will be required in connection with the offer,
sale, issuance or delivery of the Deposit Notes pursuant to the
Distribution Agreement or any applicable agreement by an agent party
to the Distribution Agreement to purchase the Deposit Notes as
principal.
7. The Bank is not required to register under the provisions
of the Investment Company Act of 1940, as amended (the "Investment
Company Act").
8. No consent, approval or authorization of or filing with
any Federal or Virginia governmental body or agency is required for
the performance by the Bank of its obligations under the Distribution
Agreement, the IPA Agreement, the Interest Calculation Agreement and
any applicable agreement by an agent party to the Distribution
Agreement to purchase the Deposit Notes as principal or the Deposit
Notes, except such as may be required by the securities or Blue Sky
laws of the various states in connection with the offer and sale of
the Deposit Notes.
9. The Deposit Notes conform in all material respects to
the description thereof contained in the Offering Circular under the
caption "Description of Notes."
10. Except as may be set forth in the Offering Circular,
there is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending, or, to
my knowledge, threatened against or affecting, the Parent or any of
its subsidiaries or the Bank and its subsidiaries, if any, which if
determined adversely to the Parent or any of its subsidiaries or the
Bank and its subsidiaries, as the case may be, could reasonably be
expected to result in any material adverse change in the financial
condition, or in the earnings or business affairs of the Parent and
its subsidiaries, taken as a whole, or the Bank and its subsidiaries,
taken as a whole or could reasonably be expected to materially and
adversely affect the consummation of the Distribution Agreement, the
IPA Agreement, the Interest Calculation Agreement or the Deposit Notes
or any transaction contemplated hereby or thereby.
11. The Deposit Notes are deposit liabilities of the
Bank, insured up to applicable limits by the Federal Deposit Insurance
Act (the "FDI Act"), and are entitled to the priority provided to
"deposit liabilities" by Section 11(d)(11) of the FDI Act.
12. The Bank is an insured bank under the provisions of
the FDI Act.
C-4
<PAGE> 32
13. Assuming the accuracy of the financial statements and
other financial data included in the Offering Circular, as of April
__, 1996 the Bank was a "well capitalized insured depository
institution" within the meaning of 12 C.F.R. 337.6 (the "Brokered
Deposit Regulation"). The Bank is not limited by the Brokered Deposit
Regulation in its ability to solicit and accept, and renew or
rollover, brokered deposits.
14. The deposits evidenced by the Deposit Notes are not
"accounts" within the meaning of Regulation DD of the Board of
Governors of the Federal Reserve System (12 C.F.R. Part 230).
15. Assuming the accuracy of the financial statements and
other financial data included in the Offering Circular, about which I
express no opinion, the Bank meets each applicable capital standard
referred to under 12 C.F.R. 330.12(b)(1), and deposit insurance on a
"pass through" basis will be available pursuant to 12 C.F.R. 330.12
for certain employee benefits plans purchasing the Deposit Notes,
subject to the requirements, limitations, and restrictions (including
any applicable aggregation rules) as set forth under 12 C.F.R. Part
330.
Because the primary purpose of my role in the transaction was not to
establish or confirm factual matters or financial, accounting or statistical
matters and because of the wholly or partially non-legal character of many of
the statements contained in the Offering Circular, I am not passing upon and do
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Offering Circular and I make no representation that
I have independently verified the accuracy, completeness or fairness of such
statements. Without limiting the foregoing, I assume no responsibility for,
and have not independently verified, the accuracy, completeness or fairness of
the financial statements and schedules and other financial and statistical data
included in the Offering Circular, and I have not examined the accounting,
financial or statistical records from which such financial statements,
schedules and data are derived. I note that, while certain portions of the
Offering Circular (including financial statements and schedules) have been
included therein on the authority of "experts" within the meaning of the
Securities Act of 1933, as amended, I am not such an expert with respect to any
portion of the Offering Circular, including without limitation such financial
statements or schedules or the other financial or statistical data included
therein.
However, in the course of my acting as counsel to the Bank in
connection with its preparation of the Offering Circular and the offering of
the Deposit Notes, prior to the date of the Offering Circular, I participated
in conferences and in telephone
C-5
<PAGE> 33
conversations with representatives of the Bank, Ernst & Young, accountants for
the Bank, your representatives and your counsel, during which conferences and
conversations the contents of the Offering Circular and related matters were
discussed. In addition, I reviewed certain corporate documents furnished to me
by the Bank or otherwise in my possession, including the minutes of the
stockholders and the Board of Directors of the Bank, which minutes are all such
minutes with respect to the Bank since the date of its incorporation.
Based on my participation in the above-mentioned conferences and
conversations, my review of the documents described above, my understanding of
applicable law and the experience I have gained in my practice thereunder, I
advise you that no information has come to my attention that causes me to
believe that the Offering Circular (other than the financial statements and
schedules and other financial and statistical data included therein and the
information included therein in the last paragraph of the cover page of the
offering circular and under the caption "Certain United States Federal Income
Tax Considerations" and "Plan of Distribution", as to which I express no view)
as of the date thereof or hereof, contained or contains an untrue statement of
a material fact or omitted or omits to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
For purposes of the opinion contained in paragraph 10 above, I
have not regarded any action, suit or proceeding to be "threatened" unless the
potential litigant or governmental authority has manifested to the management
of the Bank or the Parent or to me a present intention to initiate such action,
suit or proceeding.
I express no opinion other than as to the federal law of the
United States of America, the law of the Commonwealth of Virginia and the
general corporation law of the State of Delaware.
I am furnishing this opinion letter to you solely for your
benefit. This opinion letter is not to be used, circulated, quoted or
otherwise referred to for any other purpose, except that Brown & Wood may rely
upon this opinion letter to the same extent as if it were addressed to it for
purposes of rendering its opinion to you on the date hereof.
Very truly yours,
C-6
<PAGE> 34
EXHIBIT D
[THE BANK]
OFFICERS' CERTIFICATE
We, [Officers' Names], [Officers' Titles], respectively, of Capital
One Bank, a banking association duly organized and validly existing in good
standing under the laws of the Commonwealth of Virginia (the "Bank"), pursuant
to Section 6(b)(i) of the Distribution Agreement, dated April 30, 1996 (the
"Distribution Agreement"), among each of the Bank, Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, CS First Boston Corporation,
Donaldson, Lufkin & Jenrette Securities Corporation, Goldman, Sachs & Co., J.P.
Morgan Securities Inc., Lehman Brothers, Lehman Brothers Inc. (including its
affiliate Lehman Commercial Paper Inc.), Salomon Brothers Inc and Smith Barney
Inc., hereby certify that:
(i) Since [ ], 1996, there has been no material adverse change
in the condition, financial or otherwise, of the Bank and its subsidiaries
considered as one enterprise, or in the business affairs, earnings or business
prospects of the Bank and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business other than as set
forth or contemplated in the Offering Circular, dated April 30, 1996, as
amended or supplemented to the date hereof, relating to the Bank's Deposit
Notes;
(ii) The other representations and warranties of the Bank contained
in Section 2 of the Distribution Agreement are true and correct in all material
respects with the same force and effect as though expressly made at and as of
the date hereof; and
(iii) The Bank has performed or complied with the Distribution
Agreement and with all agreements and documentation executed in connection
therewith and satisfied in all material respects all conditions on its part to
be performed or satisfied at or prior to the date hereof.
IN WITNESS WHEREOF, we have hereunto signed our names and affixed the
seal of the Bank this 30th day of April, 1996.
By:
-----------------------------
Name:
Title:
[SEAL]
By:
-----------------------------
Name:
Title:
D-1
<PAGE> 35
EXHIBIT E
[PARENT]
Officers' Certificate
We, [Officers' Names], [Officers' Titles], respectively, of Capital
One Financial Corporation, a corporation organized under the laws of the State
of Delaware (the "Parent"), pursuant to Section 6(b)(ii) of the Distribution
Agreement, dated April 30, 1996, (the "Distribution Agreement"), among each of
Capital One Bank, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, CS First Boston Corporation, Donaldson, Lufkin & Jenrette
Securities Corporation, Goldman, Sachs & Co., J.P. Morgan Securities Inc.,
Lehman Brothers, Lehman Brothers Inc. (including its affiliate Lehman
Commercial Paper Inc.), Salomon Brothers Inc and Smith Barney Inc.
(collectively, the "Agents") hereby certify that:
1. Since [ ], 1996, there has been no material adverse change
in the condition, financial or otherwise, of the Bank and its subsidiaries or
the Parent and its subsidiaries, as the case may be, considered as one
enterprise, or in the business affairs, earnings or business prospects of the
Bank and its subsidiaries, as the case may be, considered as one enterprise,
whether or not arising in the ordinary course of business other than as set
forth or contemplated in the Offering Circular, dated April __, 1996, as
amended or supplemented to the date hereof, relating to the Banks' Deposit
Notes;
2. The representations and warranties of the Parent contained in
the Representation Certificate dated April 30, 1996, furnished by the Parent to
the Agents pursuant to Section 6(c) of the Distribution Agreement are true and
correct in all material respects with the same force and effect as though
expressly made at and as of the date hereof; and
F-1
<PAGE> 36
3. The Parent has performed or complied in all material respects
with the Distribution Agreement and with all agreements and documentation
executed in connection therewith and satisfied in all material respects all
conditions on its part to be performed or satisfied at or prior to the date
hereof.
IN WITNESS WHEREOF, we have hereunto signed our names and affixed the
seal of the Parent the 30th day of April, 1996.
By:
------------------------------
Name:
Title:
[SEAL]
By:
------------------------------
Name:
Title:
F-2
<PAGE> 37
EXHIBIT F
REPRESENTATIONS CERTIFICATE OF CAPITAL ONE FINANCIAL CORPORATION
To induce Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, CS First Boston Corporation, Donaldson, Lufkin & Jenrette
Securities Corporation, Goldman, Sachs & Co., J.P. Morgan Securities Inc.,
Lehman Brothers, Lehman Brothers Inc. (including its affiliate Lehman
Commercial Paper Inc.), Salomon Brothers Inc and Smith Barney Inc. (each
referred to as an "Agent" and collectively referred to as the "Agents") to
enter into the Distribution Agreement of even date herewith (the "Distribution
Agreement") among each of Capital One Bank (the "Bank"), and the Agents and to
induce Chemical Bank to enter into the Issuing and Paying Agency Agreement (the
"IPA Agreement") between the Bank and Chemical Bank with respect to the issue
and sale by the Bank of its Deposit Notes (the "Deposit Notes"), the
undersigned, [Officers' Names], [Officers' Titles in accordance with Section
6(c) of the Distribution Agreement] of Capital One Financial Corporation (the
"Parent"), hereby represent and warrant on behalf of the Parent to each Agent
and to Chemical Bank as of the date hereof, as of each time that there is filed
with the Securities and Exchange Commission (the "Commission") any document
relating to the Parent incorporated by reference in the Offering Circular, as
of the date of each acceptance by the Bank of an offer for the purchase of
Deposit Notes (whether by an Agent as principal or through such Agent as
agent), as of each applicable Settlement Date and as of each applicable
Representation Date, as follows:
(i) Authorization to Incorporate by Reference. The
Parent has authorized the Bank to incorporate by reference in the
Offering Circular its annual reports on Form 10-K, quarterly reports
on Form 10-Q and current reports on Form 8-K, and each other document
filed by the Corporation pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Securities and Exchange Act of 1934, as amended (the "Exchange
Act") filed by the Parent with the Commission pursuant to the Exchange
Act and the rules and regulations thereunder (the "Incorporated
Documents").
(ii) Incorporated Documents. The Incorporated Documents,
at the time they were or hereafter are filed with the applicable
federal regulatory authorities, complied or when so filed will comply,
as the case may be, in all material respects with the requirements of
the 1934 Act and the rules and regulations promulgated thereunder or
the rules and regulations otherwise applicable thereto, as the case
may be, and, when read together with the other information in the
Offering Circular, did not and will not contain an untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary in
F-1
<PAGE> 38
order to make the statements therein, in the light of the
circumstances under which they were or are made, not misleading.
(iii) Due Organization, Valid Existence and Good Standing. The
Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, and is licensed,
registered or qualified to conduct the business in which it is engaged
in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such license, registration
or qualification, except to the extent that the failure to be so
licensed, registered or qualified or to be in good standing would not
have a material adverse effect on the Parent and its subsidiaries
taken as a whole.
(iv) No Material Adverse Change. Since the respective dates as
of which information is given in the Offering Circular, there has not
been any material adverse change, or any development which could be
expected to result in a material adverse change, in the condition,
financial or otherwise, or in the business affairs, earnings or
business prospects of the Bank and its subsidiaries, considered as one
enterprise, or the Parent and its subsidiaries, considered as one
enterprise, whether or not arising in the ordinary course of business,
other than as set forth or contemplated in the Offering Circular.
In addition, to induce the Agents to enter into the Distribution
Agreement, the Parent agrees to indemnify and hold harmless each Agent and each
person, if any, who controls each Agent within the meaning of Section 15 of the
Securities Act of 1933, as amended (the "1933 Act") or Section 20 of the 1934
Act (each, a "Controlling Person") to the same extent and upon the same terms
that the Bank agree to indemnify and hold harmless each Agent and each such
Controlling Person in Section 9(a) of the Distribution Agreement and each such
person and to contribute to the payment of any losses, liabilities, claims,
damages or expenses incurred by each Agent or each such Controlling Person to
the same extent and upon the same terms that the Bank agrees to contribute in
Section 10 of the Distribution Agreement.
All representations and warranties contained in this certificate shall
remain operative and in full force and effect, regardless of any investigation
made by or on behalf of the Agents or any Controlling Person of the Agents, or
by or on behalf of the Parent and shall survive each delivery of and payment
for any of the Deposit Notes.
All terms used herein but not otherwise defined shall have the
meanings assigned to such terms in the Distribution Agreement.
F-2
<PAGE> 39
IN WITNESS WHEREOF, I have hereunto signed my name on behalf of the
Parent this 30th day of April, 1996.
By:
-----------------------------
Name:
Title:
F-3
<PAGE> 40
EXHIBIT G
ADMINISTRATIVE PROCEDURES
G-1
<PAGE> 41
ADMINISTRATIVE PROCEDURES
FOR FIXED RATE AND FLOATING RATE DEPOSIT NOTES
With maturities from 30 days to 30 years
(Dated as of April 30, 1996)
The Deposit Notes (the "Notes") are to be offered on a continuous
basis for sale by Capital One Bank (the "Bank") through each of Merrill Lynch
& Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, CS First Boston
Corporation, Goldman, Sachs & Co., J.P. Morgan Securities Inc., Lehman
Brothers, Lehman Brothers Inc. (including its affiliates Lehman Commercial
Paper Inc. and Lehman Government Securities Inc.), Salomon Brothers Inc and
Smith Barney Inc. who, as agents (each, an "Agent" and, collectively, the
"Agents"), will utilize its reasonable efforts on an agency basis to solicit
offers to purchase the Notes at 100% of the principal amount thereof. If
agreed to by the Bank and the applicable Agent, such Agent will purchase the
Notes, as principal from the Bank for resale to investors and other purchasers
at varying prices relating to prevailing market prices at the time of resale
as determined by the applicable Agent or, if so specified in the applicable
Pricing Supplement, for resale at a fixed public offering price. Only those
provisions in these Administrative Procedures that are applicable to the
particular role that an Agent will perform shall apply.
The Notes are being sold pursuant to a distribution agreement (the
"Distribution Agreement"), dated April 30, 1996, between the Bank and the
Agents. The Distribution Agreement provides both for the sale of Notes by the
Bank to the Agents as principal for resale to investors and other purchasers
and for the sale of Notes by the Bank through the Agents as agents and not as
principal in which case the Agents will act as agents of the Bank in
soliciting Note purchases. The Notes will be issued pursuant to an issuing and
paying agency agreement (the "Issuing and Paying Agency Agreement"), dated as
of April 30, 1996, between the Bank and Chemical Bank as issuing and paying
agent (the "Issuing and Paying Agent"). As used herein, the term "Offering
Circular" refers to the most recent offering circular, as such document may be
amended or supplemented, which has been prepared by the Bank for use by the
Agents in connection with the offering of the Notes.
The Notes will be issued in book-entry form (each beneficial interest
in a global Note, a "Book-Entry Note" and collectively, the "Book-Entry
Notes") and represented by one or more fully registered global Notes (each, a
"Global Note" and collectively, the "Global Notes") delivered to the Issuing
and Paying Agent, as agent for The Depository Trust Company, as depositary
("DTC,"
<PAGE> 42
which term includes any successor thereof), and recorded in the book-entry
system maintained by DTC. Book-Entry Notes represented by a Global Note are
exchangeable for definitive Notes in registered form, of like tenor and of an
equal aggregate principal amount, by the owners of such Book-Entry Notes only
upon certain limited circumstances described in the Offering Circular and the
applicable Global Note.
In connection with the qualification of Book-Entry Notes for eligibility
in the book-entry system maintained by DTC, the Issuing and Paying Agent will
perform the custodial, document control and administrative functions described
below, in accordance with its respective obligations under the Letters of
Representations from the Bank and the Issuing and Paying Agent to DTC, dated
April 30, 1996, and a Certificate Agreement, dated ________________, between
the Issuing and Paying Agent and DTC (the "Certificate Agreement"), and its
obligations as a participant in DTC, including DTC's Same-Day Funds Settlement
System ("SFDS").
Capitalized terms used herein that are not otherwise defined shall
have the meanings ascribed thereto in the Notes.
Date of Issuance/Authentication: Each Note will be dated as of the
date of its authentication by the
Issuing and Paying Agent. Each
Note shall also bear an original
issue date (the "Original Issue
Date") which shall be the
settlement date for such Note. The
Original Issue Date shall remain the
same for all Notes subsequently
issued upon transfer, exchange or
substitution of an original Note
regardless of their dates of
authentication.
Maturities: Each Note will mature on a date
(the "Maturity Date") selected by
the purchaser and agreed to by the
Bank which is not less than 30 days
nor more than 30 years from its
Original Issue Date, as selected by
the initial purchaser and agreed to
by the Bank; provided, however,that
Floating Rate Notes will mature on
an Interest Payment Date.
Registration: Notes will be issued only in fully
registered form.
2
<PAGE> 43
Calculation of Interest: Unless otherwise specified therein
and in the applicable Pricing
Supplement, interest (including
payments for partial periods) on
Fixed Rate Notes will be computed
and paid on the basis of a 360-day
year of twelve 30-day months. Unless
otherwise specified therein and in
the applicable Pricing Supplement,
interest on Fixed Rate Notes having
maturities of one year or less will
be computed on the basis of the
actual number of days of the year
divided by 360 and will be payable
only at maturity. Unless otherwise
specified therein and in the
applicable Pricing Supplement,
interest on Floating Rate Notes will
be calculated and paid on the basis
of the actual number of days in the
year divided by 360 in the case of
Commercial Paper Rate Notes, LIBOR
Notes, Federal Funds Rate Notes,
Prime Rate Notes and 11th District
Cost of Funds Rate Notes, and by
the actual number of days in the
year divided by 365 or 366, as the
case may be, in the case of Treasury
Rate Notes.
Redemption/Repayment: The Notes will be subject to
redemption by the Bank on and after
their respective Initial Redemption
Dates, if any. Initial Redemption
Dates, if any, will be fixed at the
time of sale and set forth in the
applicable Pricing Supplement and
in the applicable Note. If no
Initial Redemption Dates are
indicated with respect to a Note,
such Note will not be redeemable
prior to its Maturity Date.
The Notes will be subject to
repayment at the option of the
holders thereof in accordance with
the terms of the Notes on their
respective Holder's Optional
Repayment Dates, if any. Holder's
Optional Repayment Dates, if any,
will be fixed at the time of sale
and set forth in the applicable
Pricing Supplement and in the
applicable Note. If no Holder's
Optional Repayment Dates are
indicated with respect to a Note,
such Note will not be repayable at
the
3
<PAGE> 44
option of the holder prior to its
Maturity Date.
Acceptance and Rejection of Offers: When the Agent is soliciting offers
to purchase the Notes, the Bank
shall have the sole right to accept
offers to purchase Notes and may
reject any such offer, in whole or
in part. Each Agent shall promptly
communicate to the Bank, orally,
each offer to purchase Notes
solicited by such Agent on an agency
basis, other than those offers
rejected by the Agent. Each Agent
shall have the right, without
notice to the Bank, to reject any
proposed purchase of Notes through
it, in whole or in part.
Preparation of Pricing Supplement: If any offer to purchase a Note is
accepted by the Bank, the Bank, with
the approval of the Agent which
presented such offer (the
"Presenting Agent"), will prepare a
Pricing Supplement reflecting the
terms of such Note.
Procedure for Changing
Rates or Other
Variable Terms: When the Agents are soliciting
offers to purchase the Notes from
the Bank and a decision has been
reached to change the interest rate
or any other variable term on any
Notes being sold by the Bank, the
Bank will promptly advise the Agents
and the Agents will forthwith
suspend solicitation of offers to
purchase such Notes. The Agents
will telephone the Bank with
recommendations as to the changed
interest rates or other variable
terms. At such time as the Bank
advises the Agents of the new
interest rates or other variable
terms, the Agents may resume
solicitation of offers to purchase
such Notes. Until such time, only
"indications of interest" may be
recorded. Immediately after
acceptance by the Bank of an offer
to purchase at a new interest rate
or new variable term, the Bank and
the Presenting Agent shall follow
the procedures set forth under the
applicable "Settlement Procedures."
4
<PAGE> 45
Suspension of Solici-
tation; Amendment
or Supplement: While the Agents are soliciting
offers to purchase Notes from the
Bank, the Bank may instruct the
Agents to suspend solicitation of
offers to purchase Notes at any
time. Upon receipt of such
instructions, the Agents will
forthwith suspend solicitation of
offers to purchase from the Bank
until such time as the Bank has
advised them that solic itation of
offers to purchase may be resumed.
If the Bank decides to amend the
Offering Circular (including
incorporating any documents by
reference therein) or supplement
any of such docu ments (other than
to change rates or other variable
terms), it will immediately notify,
with confirmation in writing to
follow, the Agents and will furnish
the Agents and their counsel with
copies of the proposed amendment
(including any document proposed to
be incorporated by reference
therein) or supplement; provided,
however,that the Bank shall be
required to provide such notice and
copies only to the extent that it
is required to do so pursuant to
the terms of the Distribution
Agreement. One copy of such
proposed amendment or supplement
will be delivered or mailed to the
Agents at the following respective
addresses: Merrill Lynch & Co.,
World Financial Center, North
Tower, 10th Floor, New York, New
York 10281-1310, (212) 449-0393,
telecopier: (212) 449-2234,
Attention: Product Management -
Notes; CS First Boston Corporation,
55 East 52nd Street, New York, New
York 10055, (212) 909-2107,
telecopier: (212) 318-0532,
Attention: Joseph D. Fashano;
Goldman, Sachs & Co., 85 Broad
Street, New York, New York 10004,
(212) 902-1482, telecopier: (212)
902-0658, Attention: Medium-Term
Note Desk; J.P. Morgan Securities
Inc., 60 Wall Street, New York, New
York 10260, (212) 648-0591,
telecopier (212) 649-5909,
Attention: Medium-Term Note Desk;
Lehman Brothers Inc., 3 World
Financial Center, 12th Floor, New
York, New York 10285, (212)
526-2040, telecopier: (212)
5
<PAGE> 46
528-1718, Attention: Medium-Term
Note Department; Salomon Brothers
Inc, 7 World Trade Center, 31st
Floor, New York, New York 10048,
(212) 783-5889, telecopier: (212)
783-2274, Attention: Medium-Term
Note Group; Smith Barney Inc., 1345
Avenue of the Americas, New York,
New York 10105, (212) 698-3889,
telecopier: (212) 698-5873,
Attention: Frank Hamilton.
In the event that at the time the
solicitation of offers to purchase
from the Bank is suspended (other
than to change interest rates,
maturities, prices or other similar
variable terms with respect to the
Notes) there shall be any offers to
purchase Notes that have been
accepted by the Bank which have not
been settled, the Bank will
promptly advise the Agents whether
such offers may be settled and
whether copies of the Offering
Circular, as theretofore amended
and/or supplemented, as in effect
at the time of such suspension may
be delivered in connection with the
settlement of such orders. The Bank
will have the sole responsibility
for such decision and for any
arrangements which may be made in
the event that the Bank determines
that such orders may not be settled
or that copies of such Offering
Circular may not be so delivered.
Delivery of Offering Circular: A copy of the most recent Offering
Circular and Pricing Supplement must
accompany or precede the earlier of
(a) the written confirmation of a
sale sent to a customer or his
agent and (b) the delivery of Notes
to a customer or his agent.
Authenticity of Signatures: The Agents will have no obligations
or liability to the Bank or the
Issuing and Paying Agent in respect
of the authenticity of the
signature of any officer, employee
or agent of the Bank or the Issuing
and Paying Agent on any Note.
6
<PAGE> 47
Documents Incorpo-
rated by Reference: The Bank shall supply the Agents
with an adequate supply of all
documents incorporated by reference
in the Offering Circular.
Business Day: "Business Day" means, with respect
to any Note, any day that is not a
Saturday or Sunday and that is not
a day on which banking institutions
in The City of New York or in the
city in which the Bank is
headquartered are authorized or
required by law, regulation or
executive order to close, and with
respect to LIBOR Notes only, any
day that is a London Business Day.
"London Business Day" means any day
on which dealings in deposits in
U.S. dollars are transacted in the
London interbank market.
Issuance: All Fixed Rate Notes issued in
book-entry form having the same
Original Issue Date, Interest Rate,
Interest Payment Dates, Regular
Record Dates, Default Rate,
Maturity Date, redemption and/or
repayment terms, if any, original
issue discount terms, if any, and
otherwise having identical terms and
provisions (collectively, the "Fixed
Rate Terms") will be represented
initially by a single Global Note in
fully registered form; and all
Floating Rate Notes issued in
book-entry form having the same
Original Issue Date, interest rate
basis upon which interest may be
determined (each, an "Interest Rate
Basis"), which may be the
Commercial Paper Rate, LIBOR, the
Treasury Rate, the Federal Funds
Rate, the Prime Rate, the 11th
District Cost of Funds Rate and any
other rate set forth by the Bank in
a Floating Rate Note, Initial
Interest Rate, Index Maturity,
Spread and/or Spread Multi plier, if
any, Regular Record Dates, Maximum
Interest Rate, if any, Minimum
Interest Rate, if any, Interest
Payment Dates, Interest Payment
Period, Interest Reset Dates,
Interest Reset Period, Alternate
Rate Event Spread, LIBOR Screen, if
any, Calculation Agent, Default
Rate, Maturity Date, redemption
7
<PAGE> 48
or repayment terms, if any, original
issue discount terms, if any, and
otherwise having identical terms and
provisions, (collectively, the
"Floating Rate Terms") will be
represented initially by a single
Global Note.
Identification: The Bank has arranged with the
CUSIP Service Bureau of the
Standard & Poor's Ratings Group
(the "CUSIP Service Bureau") for
the reservation of one series of
CUSIP numbers assignable to the
Notes, which series consists of
approximately 900 CUSIP numbers that
have been reserved for and relating
to Global Notes, and the Issuing
and Paying Agent has delivered to
DTC such list of such CUSIP
numbers. The Issuing and Paying
Agent will assign CUSIP numbers to
Global Notes as described below
under Settlement Procedure B. DTC
will notify the CUSIP Service
Bureau periodically of the CUSIP
numbers that the Issuing and Paying
Agent has assigned to the Global
Notes. The Issuing and Paying Agent
will notify the Bank at any time
when fewer than 100 of the reserved
CUSIP numbers of any series remain
unassigned to Global Notes and, if
it deems it necessary, the Bank
will reserve additional CUSIP
numbers of such series for
assignment to Global Notes. Upon
obtaining such additional CUSIP
numbers, the Bank will deliver a
list of such additional numbers to
the Issuing and Paying Agent and
DTC. Book-Entry Notes having an
aggregate principal amount in
excess of $200,000,000 and otherwise
required to be represented by the
same Global Note will instead be
represented by two or more Global
Notes which shall all be assigned
the same CUSIP number.
Registration: Unless otherwise specified by DTC,
each Global Note will be registered
in the name of Cede & Co., as
nominee for DTC, on the register
maintained by the Issuing and
Paying Agent. The owner of a
Book-Entry Note (i.e., an owner of a
beneficial interest in a Global
Note) (or one or more indirect
participants in DTC designated by
such owner) will
8
<PAGE> 49
designate one or more participants in
DTC (with respect to such Book-Entry
Note, the "Participants") to act as
agent for such beneficial owner in
connection with the book-entry
system maintained by DTC, and DTC
will record in book-entry form, in
accordance with instructions
provided by such Participants, a
credit balance with respect to such
Book-Entry Notes in the account of
such Participants. The ownership
interest of such beneficial owner
in such Global Note will be
recorded through the records of such
Participants or through the separate
records of such Participants and one
or more indirect participants in
DTC.
Transfers: Transfers of a beneficial interest
in a Global Note will be
accomplished by book entries made
by DTC and, in turn, by
Participants (and in certain cases,
one or more indirect participants
in DTC) acting on behalf of
beneficial transferors and
transferees of such Global Note.
Exchanges: The Issuing and Paying Agent may
deliver to DTC and the CUSIP
Service Bureau at any time a
written notice specifying (a) the
CUSIP numbers of two or more Global
Notes outstanding on such date that
represent Notes having the same
Fixed Rate Terms or Floating Rate
Terms, as the case may be (other
than Original Issue Dates), and for
which interest has been paid to the
same date; (b) a date, occurring at
least 30 days after such written
notice is delivered and at least 30
days before the next Interest
Payment Date for the related
Book-Entry Notes, on which such
Global Notes shall be exchanged for
one or more replacement Global
Notes; and (c) a new CUSIP number,
obtained from the Issuing and
Paying Agent, to be assigned to such
replacement Global Note. Upon
receipt of such notice, DTC will
send to its Participants a written
reorganization notice to the effect
that such exchange will occur on
such date. Prior to the specified
exchange date, the Issuing and
Paying Agent will deliver to the
CUSIP Service Bureau written notice
setting forth such exchange date
and the new CUSIP number and
stating that, as of such exchange
date, the CUSIP numbers of the
Global Notes to be exchanged will no
longer be valid. On the specified
exchange date, the Issuing and
9
<PAGE> 50
Paying Agent will exchange such
Global Notes for a single Global
Note bearing the new CUSIP number,
and the CUSIP numbers of the
exchanged Global Notes will, in
accordance with CUSIP Service Bureau
procedures, be cancelled and not
immediately reassigned.
Notwithstanding the foregoing, if
the Global Notes to be exchanged
exceed $200,000,000 in aggregate
principal amount, one re placement
Global Note will be authenticated
and issued to represent each
$200,000,000 of principal amount of
the exchanged Global Notes and an
additional Global Note or Global
Notes will be authenticated and
issued in exchange for any remaining
principal amount of such exchanged
Global Notes representing such
Book-Entry Notes (see
"Denominations" below).
Denominations: All Book-Entry Notes will be
denominated in U.S. dollars.
Book-Entry Notes will be issued in
minimum denominations of $100,000
and integral multiples of $1,000 in
excess thereof. Global Notes
representing Book-Entry Notes will
be denominated in principal amounts
not in excess of $200,000,000. If
one or more Book-Entry Notes having
an aggregate principal amount in
excess of $200,000,000 would, but
for the preceding sentence, be
represented by a single Global
Note, then one Global Note will be
issued to represent each
$200,000,000 principal amount of
such Book-Entry Note or Notes and
an additional Global Note or Global
Notes will be issued to represent
any remaining principal amount of
such Book-Entry Notes. In such
case, each of the Global Notes
representing such Book-Entry Notes
shall be assigned the same CUSIP
number.
10
<PAGE> 51
Interest: General. Interest on each
Book-Entry Note will accrue from
the Original Issue Date or the most
recent Interest Payment Date for
which interest has been paid. Each
payment of interest on a Book-Entry
Note shall include interest accrued
through the day preceding, as the
case may be, the Interest Payment
Date, Maturity Date or date of
earlier redemption or repayment.
Interest payable on the Maturity
Date or date of earlier redemption
or repayment of a Book-Entry Note
will be payable to the holder to
whom the principal of such
Book-Entry Note is payable. DTC
will arrange for each pending
deposit message described under
Settlement Procedure C below to be
transmitted to the Standard & Poor's
Ratings Group, which will use the
information in the message to
include certain terms of the
related Book-Entry Note in the
appropriate daily bond report
published by the Standard & Poor's
Ratings Group.
Regular Record Dates. Unless
otherwise specified in the
applicable Pricing Sup plement, the
Regular Record Date with respect to
any Interest Payment Date for a
Fixed Rate Book-Entry Note shall be
the May 1 or November 1 next
preceding the applicable Interest
Payment Date. Unless otherwise
specified in the applicable Note,
interest on a Fixed Rate Book-Entry
Note with a maturity of one year or
less will be payable only at
maturity to the person to whom
principal shall be payable. The
Regular Record Date with respect to
any Interest Payment Date for a
Floating Rate Book-Entry Note shall
be the date 15 calendar days
(whether or not a Business Day)
prior to such Interest Payment Date.
Interest Payment Dates. Interest pay
ments will be made on each Interest
Pay ment Date commencing with the
first In terest Payment Date
following the Origi nal Issue Date;
provided, however,that the first
payment of interest on any Note
originally issued between a Regular
Record Date and an Interest Payment
Date
11
<PAGE> 52
will be made on the second Interest
Payment Date following the Original
Issue Date. If any Interest Payment
Date of a Fixed Rate Book-Entry Note
falls on a day which is not a
Business Day, the related payment
of interest on such Fixed Rate
Book-Entry Note shall be made on
the next succeeding Business Day
with the same force and effect as if
made on the date such payment was
due, and no interest shall accrue
on the amount so payable for the
period from and after such Interest
Payment Date. If any Interest
Payment Date with respect to any
Floating Rate Book-Entry Note would
otherwise be a day that is not a
Business Day, such Interest Payment
Date will be the next succeeding
Business Day, except that in the
case of a LIBOR Book-Entry Note, if
such Business Day is in the next
succeeding calendar month, such
Interest Payment Date will be the
immediately preceding Business Day.
Fixed Rate Book-Entry Notes. Unless
otherwise specified in the
applicable Pricing Supplement,
interest payments on Fixed Rate
Book-Entry Notes will be payable
semi-annually on May 15 and
November 15 of each year and on the
Maturity Date. Unless otherwise
specified in the applicable Note,
interest on Fixed Rate Book-Entry
Notes having maturities of one year
or less will be payable only at
maturity.
Floating Rate Notes. Unless
otherwise specified in the
applicable Pricing Supplement,
interest payments on Floating Rate
Book-Entry Notes will be made as
specified in the Floating Rate
Book-Entry Note.
Notice of Interest Payments and
Regular Record Dates. On the first
Business Day after any Regular
Record Date, the Issuing and Paying
Agent will deliver to DTC a written
list of Regular Record Dates and
Interest Payment Dates that will
occur during the six-month period
beginning on such first Business Day
with respect to Floating Rate
Book-Entry
12
<PAGE> 53
Notes. Promptly after each Interest
De termination Date for Floating
Rate Book-Entry Notes, the Issuing
and Paying Agent will notify the
Standard & Poor's Ratings Group of
the interest rates determined on
such Interest Determination Date.
Payments of Principal and Interest: Payments of Interest Only. Promptly
after each Regular Record Date, the
Issuing and Paying Agent will
deliver to the Bank and DTC a
written notice specifying by CUSIP
number the amount of interest to be
paid on each Book-Entry Note on the
following Interest Payment Date
(other than an Interest Payment Date
coinciding with the Maturity Date)
and the total of such amounts. DTC
will confirm the amount payable on
each Book-Entry Note on such
Interest Payment Date by reference
to the daily bond reports published
by the Standard & Poor's Ratings
Group. On such Interest Payment
Date, the Bank will pay to the
Issuing and Paying Agent, and the
Issuing and Paying Agent in turn
will pay to DTC, an amount
sufficient to pay the total amount
of interest then due and owing
(other than on the Maturity Date),
at the times and in the manner set
forth below under "Manner of
Payment."
Payments on the Maturity Date. On or
about the first Business Day of each
month, the Issuing and Paying Agent
will deliver to DTC a written list
of principal of, premium, if any,
and interest on, each Book-Entry
Note maturing on any Maturity Date
or date of earlier redemption or
repayment in the following month.
The Issuing and Paying Agent and
DTC will confirm the amounts of
such principal of, premium, if any,
and interest on, a Book-Entry Note
on or about the fifth Business Day
preceding the Maturity Date or date
of earlier redemption or repayment
of such Book-Entry Note. On such
Maturity Date, the Bank will pay to
the Issuing and Paying Agent, and
the Issuing and Paying Agent in
turn will pay to DTC, the principal
13
<PAGE> 54
amount of such Book-Entry Note,
together with interest and premium,
if any, due on such Maturity Date
or date of earlier redemption or
repayment, at the times and in the
manner set forth below under "Manner
of Payment." If any Maturity Date
or date of earlier redemption or
repayment of a Book-Entry Note
falls on a day which is not a
Business Day, the related payment
of principal of, premium, if any, or
interest on, such Book-Entry Note
shall be made on the next
succeeding Business Day with the
same force and effect as if made on
the date such payment were due, and
no interest shall accrue on the
amount so payable for the period
from and after such Maturity Date
or date of earlier redemption or
repayment, as the case may be.
Promptly after payment to DTC of
the principal of, premium, if any,
and interest due on, the Maturity
Date or date of earlier redemption
or repayment of all Book-Entry
Notes represented by a Global Note,
the Issuing and Paying Agent will
cancel such Global Note and deliver
such Global Note to the Bank with
an appropriate debit advice. On
the first Business Day of each
month, the Issuing and Paying Agent
will deliver to the Bank a written
statement indicating the total
principal amount of outstanding
Global Notes as of the close of
business on the immediately
preceding Business Day.
Manner of Payment. The total amount
of any principal of, premium, if
any, and interest on, Book-Entry
Notes due on any Interest Payment
Date or Maturity Date shall be paid
by the Bank to the Issuing and
Paying Agent in immediately
available funds available for use by
the Issuing and Paying Agent no
later than 1:00 p.m., New York City
time, on such date. The Bank will
make such payment on such
Book-Entry Notes by instructing the
Issuing and Paying Agent to withdraw
funds from an account maintained by
the Bank at the Issuing and Paying
Agent. The Bank will confirm such
instructions in writing to the
Issuing and Paying
14
<PAGE> 55
Agent. Upon receipt of such funds,
the Issuing and Paying Agent will
pay by separate wire transfer (using
Fedwire message entry instructions
in a form previously specified by
DTC) to an account at the Federal
Reserve Bank of New York previously
specified by DTC, in funds
available for immediate use by DTC,
each payment of principal of,
premium, if any, and interest on, a
Book-Entry Note on such date.
Thereafter on such date, DTC will
pay, in accordance with its SDFS
operating procedures then in
effect, such amounts in funds
available for immediate use to the
respective Participants in whose
names Book-Entry Notes are recorded
in the book-entry system maintained
by DTC. Neither the Bank nor the
Issuing and Paying Agent will have
any responsibility or liability for
the payment by DTC of the principal
of, premium, if any, or interest
on, the Book-Entry Notes to such
Participants.
Withholding Taxes. The amount of any
taxes required under applicable law
to be withheld from any interest
payment on a Book-Entry Note will
be determined and withheld by the
Participant, indirect participant
in DTC or other person responsible
for forwarding payments and
materials directly to the beneficial
owner of such Book-Entry Note.
Settlement Procedures: Settlement Procedures with regard to
Book-Entry Notes purchased by each
Agent as principal or sold by each
Agent, as agent of the Bank, will
be as follows:
A. The Presenting Agent will
advise the Bank by telephone,
confirmed by facsimile, of the
following settlement
information:
1. Taxpayer identification
number of the purchaser.
2. Principal amount of such
Book-Entry Notes.
15
<PAGE> 56
3. (a) Fixed Rate Book-Entry
Notes:
(i) Interest Rate;
(ii) Interest Payment Dates
for Fixed Rate
Book-Entry Notes; and
(iii) Regular Record Dates
for Fixed Rate
Book-Entry Notes with
maturities of greater
than one year (if
other than the May 1
or November 1 prior to
each Interest Payment
Date).
(b) Floating Rate Book-
Entry Notes:
(i) Initial Interest Rate;
(ii) Interest Rate Basis;
(iii) Index Maturity;
(iv) Spread and/or Spread
Multiplier, if any;
(v) Regular Record Dates
(if other than the
15th day prior to each
Interest Payment
Date);
(vi) Maximum Interest Rate,
if any;
(vii) Minimum Interest
Rate, if any;
(viii) Interest Payment Dates;
(ix) Interest Payment
Period;
(x) Interest Reset Dates;
(xi) Calculation Agent;
(xii) Interest Reset Period;
(xiii) Alternate Rate Event
Spread;
(xiv) LIBOR Screen, if any;
4. Price to public, if any,
of such Book-Entry Notes
(if such Book-Entry Notes
are not being offered "at
the market").
5. Trade Date.
16
<PAGE> 57
6. Settlement Date (Original
Issue Date).
7. Maturity Date.
8. Redemption provisions, if
any, including: Initial
Redemption Date, Initial
Redemption Percentage and
Annual Redemption
Percentage Reduction.
Repayment provisions, if
any, including: Holder's
Optional Repayment Date(s).
9. Net proceeds to the Bank.
10. Whether such Book-Entry
Notes are being sold to
the Presenting Agent acting
as agent for the Bank or
as principal or to an
investor or other purchaser
through the Presenting
Agent .
11. The Presenting Agent's
commission or discount, as
applicable.
12. Whether such Book-Entry
Notes are being issued
with Original Issue
Discount and the terms
thereof.
13. Default Rate.
14. Such other information
specified with respect to
such Book-Entry Notes.
B. If any offer to purchase a Note
is accepted by the Bank, the
Bank, with the approval of
the Presenting Agent, will
prepare a Pricing Supplement
reflecting the information
set forth in Settlement
Procedure A above, and will
transmit the Pricing
Supplement to the Presenting
Agent by electronic or
facsimile transmission.
C. The Bank will advise the
Issuing and Paying Agent by
electronic means,
17
<PAGE> 58
telephone (confirmed in
writing at any time on the
same date) or facsimile
transmission of the
information set forth in
Settlement Procedure "A"
above, and the name of the
Presenting Agent. The Issuing
and Paying Agent, on behalf
of the Bank, will assign a
CUSIP number of the
appropriate series to the
Global Note representing such
Book-Entry Notes and will
notify the Bank by facsimile
transmission or other
electronic transmission of
such CUSIP number as soon as
practicable, and as soon
thereafter as practicable,
the Bank will notify the
Presenting Agent by telephone
of such CUSIP number. Each
such instruction given by the
Bank to the Issuing and
Paying Agent will constitute
a representation and warranty
by the Bank to the Issuing and
Paying Agent and the Agents
that (i) the issuance and
delivery of such Global Note
has been duly and validly
authorized by the Bank and
(ii) that such Global Note,
when completed, authenticated
and delivered pursuant to the
Issuing and Paying Agency
Agreement, will constitute the
valid and legally binding
obligation of the Bank.
D. The Issuing and Paying Agent
will communicate to DTC and
the Presenting Agent through
DTC's Participant Terminal
System, a pending deposit
message specifying the
following settlement
information:
1. The information set forth in
Settlement Procedure A.
2. The identification numbers of
the participant accounts
maintained by DTC on behalf
of the Issuing and Paying
Agent and the Presenting
Agent.
18
<PAGE> 59
3. Identification as a Fixed Rate
Book-Entry Note or Floating
Rate Book-Entry Note.
4. The initial Interest Payment
Date for each Global Note
representing such Book-Entry
Notes, the number of days by
which such date succeeds the
related Regular Record Date
for DTC purposes and, if then
calculable, the amount of
interest payable on such
Interest Payment Date (which
amount shall have been
confirmed by the Issuing and
Paying Agent).
5. The CUSIP number of each
Global Note representing such
Book-Entry Notes.
6. Whether such Global Note
represents any other Notes
issued or to be issued in
book-entry form.
E. The Issuing and Paying Agent
will complete, authenticate and
deliver to DTC the Global Note
representing such Book-Entry
Notes in a form that has been
approved by the Bank, the
Issuing and Paying Agent and the
Agents.
F. DTC will credit the Book-Entry
Notes represented by such Global
Note to the participant account
of the Issuing and Paying Agent
maintained by DTC.
G. The Issuing and Paying Agent
will enter an SDFS deliver order
through DTC's Participant
Terminal System instructing DTC
(i) to debit such Book-Entry
Notes to the Issuing and Paying
Agent's participant account and
credit such Book-Entry Notes to
the participant account of the
Presenting Agent maintained by
DTC and (ii) to debit the
settlement account of the
Presenting Agent and
19
<PAGE> 60
credit the settlement account of
the Issuing and Paying Agent
maintained by DTC, in an amount
equal to the price of such
Book-Entry Notes less such
Agent's commission. Any entry
of such deliver order shall be
deemed to constitute a
representation and warranty by
the Issuing and Paying Agent to
DTC that (i) the Global Note
representing such Book-Entry
Notes has been issued and
authenticated and (ii) the
Issuing and Paying Agent is
holding such Global Note pursuant
to the Certificate Agreement.
H. In the case of Book-Entry Notes
sold through an Agent acting as
agent, the Presenting Agent will
enter an SDFS deliver order
through DTC's Participant
Terminal System instructing DTC
(i) to debit such Book-Entry
Notes to the Presenting Agent's
participant account and credit
such Book-Entry Notes to the
participant account of the
Partici pants maintained by DTC
and (ii) to debit the settlement
accounts of such Participants
and credit the settlement account
of the Presenting Agent
maintained by DTC, in an amount
equal to the initial public
offering price of such Book-Entry
Notes.
I. Transfers of funds in accordance
with SDFS deliver orders
described in Settlement
Procedures G and H will be
settled in accordance with SDFS
operating procedures in effect on
the Settlement Date.
J. The Issuing and Paying Agent will
credit to an account of the Bank
maintained at the Issuing and
Paying Agent funds available for
immediate use in the amount
transferred to the Issuing and
Paying Agent in accordance with
Settlement Procedure G.
20
<PAGE> 61
K. In the case of Book-Entry Notes
sold through an Agent acting as
agent, the Presenting Agent
willconfirm the purchase of such
Book-Entry Notes to the
purchaser either by transmitting
to the Participant with respect
to such Book-Entry Notes a
confirmation order through DTC's
Participant Terminal System or
by mailing a written confirmation
to such purchaser.
Settlement Procedures Timetable: For offers to purchase Book-Entry
Notes accepted by the Bank,
Settlement Procedures A through K
set forth above shall be completed
as soon as possible. However, all
information on sales settling one
day or more after the Trade Date
will be transmitted to DTC no later
than 10:00 a.m. on the Settlement
Date.
If a sale is to be settled on the
same Business Day as the Trade Date,
Settle ment Procedure A shall be
completed no later than 11:00 a.m.
on such Business Day, Settlement
Procedure C shall be completed no
later than 12:00 p.m. on such
Business Day and Settlement Procedure
D shall be completed no later than
1:00 p.m. on such Business Day.
If a sale is to be settled more than
one Business Day after the Trade
Date, Settlement Procedures A and B
must be completed no later than 4:00
p.m. on the Trade Date and
Settlement Procedures C and D may,
if necessary, be completed at any
time on the first Business Day after
such Trade Date. Settlement
Procedure I is subject to extension
in accordance with any extension of
Fedwire closing deadlines and in the
other events speci fied in the SDFS
operating procedures in effect on
the Settlement Date.
If settlement of a Book-Entry Note is
rescheduled or cancelled, the Issuing
and Paying Agent will deliver to DTC,
through DTC's Participant Terminal
System, a cancellation message to
such effect by no later than 2:00
p.m., New
21
<PAGE> 62
York City time, on the Business Day
immediately preceding the scheduled
Settlement Date.
Failure to Settle: If the Issuing and Paying Agent fails
to enter an SDFS deliver order with
respect to a Book-Entry Note
pursuant to Settlement Procedure G,
then the Issuing and Paying Agent
may deliver to DTC, through DTC's
Participant Terminal System, as soon
as practicable a with drawal message
instructing DTC to debit such
Book-Entry Note to the participant
account of the Issuing and Paying
Agent maintained at DTC. DTC will
process the withdrawal message,
provided that such participant
account contains a principal amount
of the Global Note representing such
Book-Entry Note that is at least
equal to the principal amount to be
debited. If withdrawal messages are
processed with respect to all
Book-Entry Notes represented by a
Global Note, the Issuing and Paying
Agent will mark such Global Note
"cancelled," make appro priate
entries in its records and return
such Global Note to the Bank. The
CUSIP number assigned to such Global
Note shall, in accordance with CUSIP
Service Bureau procedures, be
cancelled and not immediately
reassigned. If withdrawal messages
are processed with respect to some
of the Book-Entry Notes represented
by a Global Note, the Issuing and
Paying Agent will exchange such
Global Note for two Global Notes,
one of which shall represent the
Book-Entry Notes for which such
withdrawal messages are processed
and shall be cancelled immediately
after issuance, and the other of
which shall represent the other
Book-Entry Notes previously
represented by the sur rendered
Global Note and shall bear the CUSIP
number of the surrendered Global
Note.
In the case of any Book-Entry Note
sold through an Agent, acting as
agent, if the purchase price for any
Book-Entry Note is not timely paid to
the Participants with respect to
such Book-Entry Note by the
beneficial purchaser
22
<PAGE> 63
thereof (or a person, including an
indirect participant in DTC, acting
on behalf of such purchaser), such
Participants and, in turn, the
applicable Agent may enter SDFS
deliver orders through DTC's
Participant Terminal System reversing
the orders entered pursuant to
Settlement Procedures G and H,
respectively. Thereafter, the Issuing
and Paying Agent will deliver the
withdrawal message and take the
related actions described in the
preceding paragraph. If such
failure shall have occurred for any
reason other than default by the
applicable Agent to perform its
obligations hereunder or under the
Distribution Agreement, the Bank
will reimburse such Agent on an
equitable basis for its loss of the
use of funds during the period when
the funds were credited to the
account of the Bank.
Notwithstanding the foregoing, upon
any failure to settle with respect to
a Book-Entry Note, DTC may take any
actions in accordance with its SDFS
operating procedures then in effect.
In the event of a failure to settle
with respect to a Book-Entry Note
that was to have been represented by
a Global Note also representing
other Book-Entry Notes, the Issuing
and Paying Agent will provide, in
accordance with Settlement Procedure
E, for the authentication and
issuance of a Global Note
representing such remaining
Book-Entry Notes and will make
appropriate entries in its records.
23
<PAGE> 1
EXHIBIT 10.3
FIRST AMENDMENT TO OPERATIVE AGREEMENTS
THIS FIRST AMENDMENT TO OPERATIVE AGREEMENTS dated as of June 21, 1996
(the "First Amendment") is among CAPITAL ONE BANK, a Virginia banking
corporation (the "Lessee" or the "Construction Agent", as appropriate), FIRST
SECURITY BANK OF UTAH, N.A., a national banking association, not individually
but solely as Owner Trustee under the COB Real Estate Trust 1995-1 (the "Owner
Trustee", the "Borrower" or the "Lessor", as appropriate), NATIONSBANK OF
TEXAS, N.A., a national banking association, as a Lender (in such capacity,
the "Lender"), NATIONSBANK OF TEXAS, N.A., a national banking association, as
Administrative Agent for the Lenders (in such capacity, the "Agent") and
NATIONSBANK OF TEXAS, N.A., a national banking association, as Holder of the
Certificates issued with respect to the COB Real Estate Trust 1995-1 (in such
capacity, the "Holder") and is a first amendment to: (a) that certain
Participation Agreement dated as of January 5, 1996 (the "Participation
Agreement") among the Construction Agent, the Lessee, the Owner Trustee, the
Agent, the Lender and the Holder; (b) that certain Lease Agreement (Tax
Retention Operating Lease) dated as of January 5, 1996 (the "Lease") between
the Lessor and the Lessee; (c) that certain Credit Agreement dated as of
January 5, 1996 (the "Credit Agreement") among the Borrower, the Lender and
the Agent; and (d) that certain Amended and Restated Trust Agreement dated as
of January 5, 1996 (the "Trust Agreement") between the Owner Trustee and the
Holder.
W I T N E S S E T H:
WHEREAS, the Lessee has requested that certain amendments and
modifications be made to the Participation Agreement and the Lease; and
WHEREAS, the Lessor, the Lender, the Agent and the Holder have agreed to
the modifications requested by the Lessee.
NOW, THEREFORE, in consideration of the premises set forth herein and
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
A. Capitalized terms used but not otherwise defined in this First
Amendment shall have the meanings set forth in the Participation Agreement.
B. The Participation Agreement is amended in the following respects:
1. The terms set forth below and defined in Appendix A to the
Participation Agreement shall be amended to read as follows:
<PAGE> 2
"Applicable Percentage" shall mean with respect to the applicable
Level Status, the applicable rate per annum set forth opposite such Level
Status:
<TABLE>
<CAPTION>
===============================================================
Applicable Applicable
Level Status Percentage Percentage
for for
Eurodollar Loans Unused Fee
- ---------------------------------------------------------------
<S> <C> <C>
Level I Status .32% .10%
- ---------------------------------------------------------------
Level II Status .37% .125%
- ---------------------------------------------------------------
Level III Status .47% .15%
- ---------------------------------------------------------------
Level IV Status .52% .17%
- ---------------------------------------------------------------
Level V Status .72% .225%
- ---------------------------------------------------------------
Level VI Status 1.37% .375%
===============================================================
</TABLE>
Changes in the Applicable Percentage resulting from changes in the Debt
Rating shall become effective on the date on which such Debt Rating is
announced to the public by S&P, Moody's or Fitch, as applicable, and
shall remain in effect until the next change in such Debt Rating;
provided, that, until the effectiveness of any change in the Applicable
Percentage based upon a Debt Rating announced after the Initial Closing,
Level IV Status shall apply.
"Commitment Fee Payment Date" shall mean the fifteenth day of each
January, April, July and October of each year and the last day of the
Commitment Period, or such earlier date as the Commitments shall
terminate as provided in the Credit Agreement.
"Completion Date" shall mean, with respect to a Property, the
earlier of (a) the date on which Completion for such Property has
occurred or (b) June 21, 1998.
"Construction Period Termination Date" shall mean the earlier of (a)
the date that the Commitments have been terminated in their entirety in
accordance with the terms of Section 5(a) of the Credit Agreement or (b)
June 21, 1998.
"Holder Applicable Margin" shall mean 1.52%.
"Holder Commitments" shall mean $2,700,000, provided, that the
Holder Commitment of each Holder shall be as set forth in the Trust
Agreement.
"Lender Commitments" shall mean $87,300,000; provided if there shall
be more than one Lender, the Lender Commitment of each Lender shall be as
set forth in Schedule
- 2 -
<PAGE> 3
1.1 to the Credit Agreement as such Schedule 1.1 may be amended and
replaced from time to time.
"Maturity Date" shall mean June 21, 2001.
"Operative Agreements" shall mean the following: the Participation
Agreement, the Agency Agreement, the Trust Agreement, the Certificates,
the Credit Agreement, the Notes, the Lease (and a memorandum thereof in a
form reasonably acceptable to the Agent), each Lease Supplement (and a
memorandum thereof in a form reasonably acceptable to the Agent), the
Security Agreement, the Mortgage Instrument and each Ground Lease.
"Permitted Facility" shall mean each of:
(i) The approximately 198,000 square foot operations center to
be constructed on the real property comprising a part of the Trust Estate
as of the Initial Closing Date and consisting of approximately 18 acres
located north of Innsbrook Corporate Park in Henrico County, Virginia;
(ii) The existing office building on the real property
consisting of approximately 9.75 acres located in the Innsbrook Corporate
Center, which property is currently leased by Capital One Bank; and
(iii) The approximately 155,000 square foot office building to
be constructed on the real property subject to the Ground Lease between
the Lessee and the Lessor dated June 21, 1996 located in the Innsbrook
Corporate Center.
2. Section 5.3(t) is hereby amended to read as follows:
"(t) in their sole and absolute discretion, the Lenders and the
Holders shall have agreed to accept, and to fund the respective Loans and
Holder Advances regarding, the particular property then under
consideration as a Property; provided, however, it is hereby understood
and agreed that (i) the real property consisting of approximately 18
acres located north of Innsbrook Corporate Park, in Henrico County,
Virginia, which is presently owned by the Trust, (ii) the real property
consisting of approximately 9.75 acres located in Innsbrook Corporate
Center and (iii) the real property subject to the Ground Lease dated June
21, 1996 located in the Innsbrook Corporate Center and the approximately
155,000 square foot office building to be constructed thereon are
acceptable Properties."
3. Subclause (z) of Section 5.5 is hereby amended to read as
follows:
- 3 -
<PAGE> 4
", and (z) an Appraisal for each Property which, including the cost
of Equipment located at such Property, shall be at least equal to 75% of
the Property Cost for such Property."
C. The Lease is amended in the following respects:
1. The reference in Section 2.2 to January 5, 2001 is hereby
changed to June 21, 2001.
2. Section 10.1(e) is hereby deleted in its entirety and replaced
with the following:
"(e) Intentionally omitted."
3. Section 28.1 is hereby amended by adding the following proviso
to the end of the third sentence:
"; provided, however, that for purposes of this Lease the leverage
ratio of the Lessee under Section 8.07(c) of the Capital One Credit
Agreement shall be calculated as if the defined term "Indebtedness" in
the Capital One Credit Agreement included the Termination Value (as
defined in Appendix A to the Participation Agreement) and the Lessee
shall be in violation of the Incorporated Covenant contained in Section
8.07(c) if the leverage ratio is more than 10 to 1 after including the
Termination Value as part of Indebtedness."
D. The Credit Agreement is amended in the following respects:
1. Schedule 1.1 to the Credit Agreement is hereby replaced with
Schedule 1.1 attached hereto and made a part of this First Amendment.
2. The Tranche A Note is hereby amended, restated and replaced
with the Tranche A Note attached hereto as Exhibit A. The Tranche B Note
is hereby amended, restated and replaced with the Tranche B Note attached
hereto as Exhibit B.
E. The Trust Agreement is amended in the following respects:
1. The Certificate of the Owner Trustee issued to the Holder in
the original amount of $1,875,000.00 shall be amended, restated and
substituted with a new Certificate in the amount of $2,700,000 in the
form attached hereto as Exhibit C.
F. Each of the parties hereto hereby represent and warrant that as of
the date hereof (i) the representations and warranties of such party contained
in Section 7 and Section 8 of the Participation Agreement are true and correct
in all material
- 4 -
<PAGE> 5
respects and (ii) no Default or Event of Default currently exists and is
continuing with respect to any such party.
G. The effectiveness of this First Amendment is contingent upon the
receipt by the Agent of the following items, each in form and substance
satisfactory to the Agent: (i) this First Amendment duly executed by the
parties hereto; (ii) the Amended, Restated and Substituted Tranche A Note duly
executed by the Borrower; (iii) the Amended, Restated and Substituted Tranche
B Note duly executed by the Borrower; (iv) the Amended, Restated and
Substituted Holder Certificate duly executed by the Owner Trustee; and (v)
such other certificates, resolutions and opinions as deemed necessary or
advisable by the Agent.
H. This First Amendment may be executed in any number of counterparts,
each of which when executed and delivered shall be deemed to be an original
and it shall not be necessary in making proof of this First Amendment to
produce or account for more than one such counterpart.
I. Except as modified hereby, all of the terms and conditions of the
Operative Agreements shall remain in full force and effect.
J. This First Amendment shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Virginia.
- 5 -
<PAGE> 6
IN WITNESS WHEREOF, each of the parties hereto has caused this First
Amendment to be duly executed and delivered as of the date first above
written.
CAPITAL ONE BANK,
as Construction Agent and as Lessee
By: /s/ MURRAY P. ABRAMS
--------------------------------
Name: Murray P. Abrams
-----------------------------
Title: Assistant Treasurer
----------------------------
FIRST SECURITY BANK OF UTAH, N.A.,
not individually, except as expressly stated
herein, but solely as Owner Trustee under the
COB Real Estate Trust 1995-1
By: /s/ VAL T. ORTON
--------------------------------
Name: Val T. Orton
------------------------------
Title: Vice President
-----------------------------
NATIONSBANK OF TEXAS, N.A.,
as Holder, as a Lender and as Administrative
Agent
By: /s/ GREGORY T. RUSSELL
--------------------------------
Name: Gregory T. Russell
------------------------------
Title: Relationship Manager
-----------------------------
<PAGE> 7
SCHEDULE 1.1
<TABLE>
<CAPTION>
Tranche A Tranche B
Commitment Commitment
--------------------- ---------------------
Name and Address of Lender Amount Percentage Amount Percentage
- -------------------------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C>
NationsBank of Texas, N.A. $77,400,000 100% $9,900,000 100%
901 Main Street, 51st Floor
Dallas, Texas 75202
</TABLE>
<PAGE> 8
EXHIBIT A
AMENDED, RESTATED AND SUBSTITUTED
TRANCHE A NOTE
$77,400,000 June 21, 1996
FOR VALUE RECEIVED, the undersigned, FIRST SECURITY BANK OF UTAH, N.A.,
not in its individual capacity, but solely as Owner Trustee for the COB Real
Estate Trust 1995-1 (the "Borrower"), hereby unconditionally promises to pay
to the order of NATIONSBANK OF TEXAS, N.A. (the "Lender") at the office of
NationsBank of Texas, N.A. in lawful money of the United States of America and
in immediately available funds, on the Maturity Date, the principal amount of
(a) SEVENTY-SEVEN MILLION FOUR HUNDRED THOUSAND AND NO/100 DOLLARS
($77,400,000), or, if less, (b) the aggregate unpaid principal amount of all
Loans made by the Lender to the Borrower pursuant to Section 2.1 of the Credit
Agreement (as defined below). The Borrower further agrees to pay interest in
like money at such office on the unpaid principal amount hereof from time to
time outstanding at the rates and on the dates specified in Section 2.8 of
such Credit Agreement.
The holder of this Note is authorized to endorse on the schedules annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date, Type and amount of each Loan
made pursuant to the Credit Agreement and the date and amount of each payment
or prepayment of principal thereof, each continuation thereof and each
conversion of all or a portion thereof to another Type. Each such endorsement
shall constitute prima facie evidence of the accuracy of the information
endorsed. The failure to make any such endorsement or any error in such
endorsement shall not affect the obligations of the Borrower in respect of
such Loan.
This Note (a) amends, restates and is in substitution for the Tranche A
Note dated as of January 5, 1996 in the original principal amount of
$53,750,000, (b) is one of the Notes referred to in the Credit Agreement dated
January 5, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, the Lender, the other banks
and financial institutions from time to time parties thereto and NationsBank
of Texas, N.A., as Administrative Agent, (c) is subject to the provisions of
the Credit Agreement (including, without limitation, Section 9.18 thereof) and
(d) is subject to optional and mandatory prepayment in whole or in part as
provided in the Credit Agreement. Reference is hereby made to the Credit
Documents for a description of the properties and assets in which a security
interest has been granted, the nature and extent of the security and the
guarantees, the terms and conditions upon which the security interests and
each guarantee were granted and the rights of the holder of this Note in
respect thereof.
A-1
<PAGE> 9
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE COMMONWEALTH OF VIRGINIA.
FIRST SECURITY BANK OF UTAH, N.A., not
individually, but solely as Owner Trustee for
COB Real Estate Trust 1995-1
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
A-2
<PAGE> 10
EXHIBIT B
AMENDED, RESTATED AND SUBSTITUTED
TRANCHE B NOTE
$9,900,000 June 21, 1996
FOR VALUE RECEIVED, the undersigned, FIRST SECURITY BANK OF UTAH, N.A.,
not in its individual capacity, but solely as Owner Trustee for the COB Real
Estate Trust 1995-1 (the "Borrower"), hereby unconditionally promises to pay
to the order of NATIONSBANK OF TEXAS, N.A. (the "Lender") at the office of
NationsBank of Texas, N.A. in lawful money of the United States of America and
in immediately available funds, on the Maturity Date, the principal amount of
(a) NINE MILLION NINE HUNDRED THOUSAND AND NO/100 DOLLARS ($9,900,000), or, if
less, (b) the aggregate unpaid principal amount of all Loans made by the
Lender to the Borrower pursuant to Section 2.1 of the Credit Agreement (as
defined below). The Borrower further agrees to pay interest in like money at
such office on the unpaid principal amount hereof from time to time
outstanding at the rates and on the dates specified in Section 2.8 of such
Credit Agreement.
The holder of this Note is authorized to endorse on the schedules annexed
hereto and made a part hereof or on a continuation thereof which shall be
attached hereto and made a part hereof the date, Type and amount of each Loan
made pursuant to the Credit Agreement and the date and amount of each payment
or prepayment of principal thereof, each continuation thereof and each
conversion of all or a portion thereof to another Type. Each such endorsement
shall constitute prima facie evidence of the accuracy of the information
endorsed. The failure to make any such endorsement or any error in such
endorsement shall not affect the obligations of the Borrower in respect of
such Loan.
This Note (a) amends, restates and is in substitution for the Tranche B
Note dated as of January 5, 1996 in the original principal amount of
$6,875,000, (b) is one of the Notes referred to in the Credit Agreement dated
January 5, 1996 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Borrower, the Lender, the other banks
and financial institutions from time to time parties thereto and NationsBank
of Texas, N.A., as Administrative Agent, (c) is subject to the provisions of
the Credit Agreement (including, without limitation, Section 9.18 thereof) and
(d) is subject to optional and mandatory prepayment in whole or in part as
provided in the Credit Agreement. Reference is hereby made to the Credit
Documents for a description of the properties and assets in which a security
interest has been granted, the nature and extent of the security and the
guarantees, the terms and conditions upon which the security interests and
each guarantee were granted and the rights of the holder of this Note in
respect thereof.
B-1
<PAGE> 11
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be declared to
be, immediately due and payable, all as provided in the Credit Agreement.
All parties now and hereafter liable with respect to this Note, whether
maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit Agreement
and used herein shall have the meanings given to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE COMMONWEALTH OF VIRGINIA.
FIRST SECURITY BANK OF UTAH, N.A., not
individually, but solely as Owner Trustee for
COB Real Estate Trust 1995-1
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
B-2
<PAGE> 12
EXHIBIT C
FIRST SECURITY BANK OF UTAH, N.A.
TRUSTEE UNDER
AMENDED AND RESTATED
TRUST AGREEMENT DATED AS OF JANUARY 5, 1996
AMENDED, RESTATED AND SUBSTITUTED
HOLDER CERTIFICATE
COB REAL ESTATE TRUST 1995-1
$2,700,000 June 21, 1996
First Security Bank of Utah, N.A., as trustee (herein in such capacity
called the "Owner Trustee") under that certain Amended and Restated Trust
Agreement dated as of January 5, 1996 (herein called the "Trust Agreement",
the defined terms therein not otherwise defined herein being used herein with
the same meanings), between NationsBank of Texas, N.A. as the initial Holder
and the Owner Trustee, hereby certifies as follows: (i) this Holder
Certificate amends, restates and is in substitution for that certain Holder
Certificate dated as of January 5, 1996 in the original amount of $1,875,000
given by the Owner Trustee in favor of NationsBank of Texas, N.A., (ii) this
Holder Certificate is the Holder Certificate referred to in the Section 3.1(d)
of the Trust Agreement, which Holder Certificate has been issued by the Owner
Trustee pursuant to the Trust Agreement and (iii) subject to the prior payment
of, and to the assignment, pledge or mortgage of the Trust Estate to secure
the Notes as set forth in the applicable Operative Agreements, the holder of
this Holder Certificate has an undivided beneficial interest in properties of
the Owner Trustee constituting part of the Trust Estate and is entitled to
receive as provided in the Trust Agreement, a portion of the Rent received or
to be received by the Owner Trustee for the Property, as well as a portion of
certain other payments which may be received by the Trustee pursuant to the
terms of the Operative Agreements as more particularly set forth therein.
All amounts payable hereunder and under the Trust Agreement shall be paid
only from the income and proceeds from the Trust Estate and only to the extent
that the Owner Trustee shall have received sufficient income or proceeds from
the Trust Estate to make such payments in accordance with the terms of the
Trust Agreement, except as specifically provided in Section 6.1 of the Trust
Agreement; and the holder hereof, by its acceptance of this Holder
Certificate, agrees that it will look solely to the income and proceeds from
the Trust Estate to the extent available for
C-1
<PAGE> 13
distribution to the holder hereof as provided in the Trust Agreement and that,
except as specifically provided in the Trust Agreement, the Owner Trustee is
not personally liable to the holder hereof for any amount payable under this
Holder Certificate or the Trust Agreement.
The amounts payable to the holder hereof pursuant to the Trust Agreement
shall be paid or caused to be paid by the Owner Trustee to, or for the account
of, such Holder, or its nominee, by transferring such amount in immediately
available funds to a bank institution or banking institutions with bank wire
transfer facilities for the account of such Holder or as otherwise instructed
in writing from time to time by such Holder.
This Holder Certificate shall mature, and all amounts payable to the
holder hereof pursuant to the Trust Agreement shall be due on, the Maturity
Date.
This Holder Certificate shall bear a yield on the unpaid amount hereof
from time to time outstanding hereunder and under the Trust Agreement at the
Holder Yield as provided in the Trust Agreement. The Holder Yield on this
Holder Certificate shall be computed as provided in the Trust Agreement and
shall be payable at the rates, at the times and from the dates specified in
the Trust Agreement.
From and after the execution of the Participation Agreement, the rights
of the holder of this Holder Certificate under the Trust Agreement as well as
the beneficial interest of the holder of this Holder Certificate in and to the
properties of the Owner Trustee constituting part of the Trust Estate, are
subject and subordinate to the rights of the holders of the Notes to the
extent provided in the applicable Operative Agreements. The Trust Estate has
been or will be assigned, pledged and mortgaged to the Administrative Agent,
on behalf of the Lenders, as security for the Notes. Reference is hereby made
to the Trust Agreement, the Participation Agreement, the Credit Agreement, the
Security Agreement and the Notes for statements of the rights of the holder of
this Holder Certificate and of the rights of the holders of, and the nature
and extent of the security for, the Notes, as well as for a statement of the
terms and conditions of the trusts created by the Trust Agreement, to all of
which terms and conditions the holder hereof agrees by its acceptance of this
Holder Certificate.
The holder hereof, by its acceptance of this Holder Certificate, agrees
not to transfer this Holder Certificate except in accordance with the terms of
the Trust Agreement and the other Operative Agreements.
THIS HOLDER CERTIFICATE SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS) AND DECISIONS OF THE
COMMONWEALTH OF VIRGINIA. WHENEVER POSSIBLE EACH PROVISION OF THIS HOLDER
CERTIFICATE SHALL
C-2
<PAGE> 14
BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER APPLICABLE
LAW, BUT IF ANY PROVISION OF THIS HOLDER CERTIFICATE SHALL BE PROHIBITED BY OR
INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE
EXTENT OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER
OF SUCH PROVISION OR THE REMAINING PROVISIONS OF THIS HOLDER CERTIFICATE.
C-3
<PAGE> 15
IN WITNESS WHEREOF, the undersigned authorized officer of the Owner
Trustee has executed this Holder Certificate as of the date first set forth
above.
FIRST SECURITY BANK OF UTAH, N.A.,
as Owner Trustee
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
C-4
<PAGE> 1
EXHIBIT 11
CAPITAL ONE FINANCIAL CORPORATION
COMPUTATION OF PER SHARE EARNINGS
THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
- ----------------------------------------------------------------------------------------------------------
1996 1995 1996 1995
==========================================================================================================
<S> <C> <C> <C> <C>
PRIMARY
Net income $ 38,183 $ 29,646 $ 76,196 $ 54,755
==========================================================================================================
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING
Average common shares outstanding 66,210,275 65,623,332 66,185,555 65,615,344
Net effect of dilutive restricted stock (1) 7,238 323,309 11,149 298,874
Net effect of dilutive stock options (1) 674,354 498,861 615,726 326,309
- ----------------------------------------------------------------------------------------------------------
Weighted average common and
common equivalent shares 66,891,867 66,445,502 66,812,430 66,240,527
==========================================================================================================
EARNINGS PER SHARE $ 0.57 $ 0.45 $ 1.14 $ 0.83
==========================================================================================================
FULLY DILUTED
Net income $ 38,183 $ 29,646 $ 76,196 $ 54,755
==========================================================================================================
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING
Average common shares outstanding 66,210,275 65,623,332 66,185,555 65,615,344
Net effect of dilutive restricted stock (2) 8,273 343,593 11,300 333,313
Net effect of dilutive stock options (2) 674,354 498,861 661,600 370,392
- ----------------------------------------------------------------------------------------------------------
Weighted average common and
common equivalent shares 66,892,902 66,465,786 66,858,455 66,319,049
==========================================================================================================
EARNINGS PER SHARE $ 0.57 $ 0.45 $ 1.14 $ 0.83
==========================================================================================================
</TABLE>
(1) Based on the treasury stock method using average market price.
(2) Based on the treasury stock method using the higher of ending or
average market price.
The calculations of common and common equivalent earnings per share
and fully diluted earnings per share are submitted in accordance with
Securities Exchange Act of 1934 Release No. 9083 although both
calculations are not required by footnote 2 to paragraph 14 of APB
Opinion No. 15 because there is dilution of less than 3%. The
Registrant has elected to show fully diluted earnings per share in its
financial statements.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 8,426
<SECURITIES> 642,542
<RECEIVABLES> 3,569,740
<ALLOWANCES> (74,000)
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 155,569
<DEPRECIATION> 0<F2>
<TOTAL-ASSETS> 5,676,121
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
0
0
<COMMON> 662
<OTHER-SE> 663,601
<TOTAL-LIABILITY-AND-EQUITY> 5,676,121
<SALES> 0
<TOTAL-REVENUES> 612,642
<CGS> 0
<TOTAL-COSTS> 315,784
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 50,278
<INTEREST-EXPENSE> 125,634
<INCOME-PRETAX> 120,946
<INCOME-TAX> 44,750
<INCOME-CONTINUING> 76,196
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 76,196
<EPS-PRIMARY> 1.14
<EPS-DILUTED> 1.14
<FN>
<F1>Non-classified balance sheet
<F2>PP&E shown net
</FN>
</TABLE>
